For Aker ASA, the Norwegian industrial powerhouse that began life as a boat builder, a deal to buy Eddie O’Connor’s Mainstream Renewable Power in January 2021 was a springboard to float one of its portfolio companies weeks later.
“Combining Mainstream’s global organisation and renewable assets with aker’s 180-year track record of building and developing industrial companies is another step in line with our long-term strategy for value creation,” said Øyvind Eriksen, chief executive of aker ASA.
Aker Horizons, the unit going through the initial public offering (IPO), was handed Mainstream, after the group agreed to buy a 75 per cent stake, in a deal that valued the Irish business at €900 million.
A 20 per cent spike in Aker ASA’s own shares within days of the Mainstream deal suggested investors in Oslo thought it had snapped up a bargain in the wind and solar energy developer, with projects spanning Latin america, Africa and asia-Pacific.
But it was a moment many of the 600 wealthy Irish individuals who backed O’Connor when he set up the company in 2008 – with hopes he could replicate the stunning €1.8 billion achieved for Airtricity, his previous venture – had long doubted would ever arrive.
Theirs had been a hair-raising ride. The financial crisis battered initial plans, and for a decade the company survived by selling developments early – and on the cheap – to keep the lights on. Things finally turned with the transformational sale of a large wind farm project off the coast of Scotland for more than €600 million in 2018.
For O’Connor, who died early last year, the 2021 deal delivered a fifteenfold gain on the €30 million he had put into Mainstream. He and a handful of others rolled over a 25 per cent stake.
However, 60 cent of the small Irish investors opted to sell out entirely in 2021, rather than reinvest some money in the Aker Horizons deal – walking away with about a 500 per cent return. They where the luckiest ones.
Mainstream posted an almost €670 million net loss last year, according to results filed in the past week with the Companies Registration Office (CRO) – driven by impairment charges against assets in Chile, by far its most valuable development at the time of the takeover.
It brings total losses sustained as the deal to €1.2 billion – some €300 million more than the purchase price.
The scale of value destruction has rippled through Aker ASA – a €5 billion empire controlled for three decades by billionaire Kjell Inge Røkke, a high-school dropout who began his career as a fisherman. The group has seven listed units and affiliates spanning a range of activities from oil and gas exploration to harvesting Antarctic krill for omega-3 oils.
The disastrous Chilean venture contributed to Aker Horizons being under such financial pressure at the start of the summer that Aker ASA agreed to take over its business activities.
Eriksen, Aker ASA’s chief executive, put it bluntly in a letter to shareholders earlier this month. “The merger was a
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