Orrön Energy sells 50% stake in Leikanger hydropower plant for €53m

Orrön Energy AB has announced a significant transaction involving the sale of its 50 percent interest in the Leikanger hydropower plant in Vestland, Norway. The stake was sold for an enterprise value of approximately 613 million Norwegian Kroner (around 53 million Euros) to Sognekraft Produksjon AS, the existing partner in the project.

This strategic divestiture is part of Orrön Energy’s broader strategy to adopt an opportunistic approach towards value creation, capitalizing on favorable market conditions. By selling the Leikanger hydropower plant, Orrön Energy aims to reallocate resources to more accretive investment opportunities within its operational and greenfield ventures. The sale, which is set on a debt and cash-free basis, has an effective date of January 1, 2024, and is expected to conclude by the second quarter of 2024, pending customary financing approvals for both Orrön Energy and Sognekraft.

Orrön Energy initially acquired a 50 percent interest in the company that owns the Leikanger hydropower plant in 2019. The asset became part of Orrön Energy’s portfolio when the company transitioned into a renewables entity in July 2022. Following this transaction, Sognekraft will assume full ownership of the company operating the Leikanger hydropower plant.

Daniel Fitzgerald, CEO of Orrön Energy, emphasized the strategic nature of this divestiture. “This transaction is a perfect example of our opportunistic and entrepreneurial approach to value creation, and the sales price clearly demonstrates the underlying value of our assets and the discount in our share price,” Fitzgerald stated. He further highlighted the financial impact, noting, “The Leikanger asset represents less than 10 percent of Orrön Energy’s annual power generation, however the value of this transaction represents approximately 20 percent of our enterprise value and 30 percent of our current market capitalisation.”

The decision by Orrön Energy to divest its stake in the Leikanger hydropower plant reflects a calculated strategy to optimize its asset portfolio for higher returns. This move is indicative of the shifting dynamics in the renewable energy sector, where companies are increasingly looking to maximize returns on investment by capitalizing on high-value opportunities and reinvesting in assets with potentially higher yields.