Danes wonder whether Goldman milked the country
When Goldman Sachs bought part of Denmark’s biggest energy utility three years ago, it triggered a political crisis that split the ruling coalition. Now, as the Wall Street bank sells about half that stake, some members of the Danish parliament are again crying foul.
Goldman, through a vehicle based in Luxembourg, sold the equivalent of just over 6% of Dong Energy for 6.5-billion kroner ($940m) on Friday.
In 2014, Goldman paid 8billion kroner for 18%. A stake that size would now fetch about 18.5-billion kroner. (Goldman still owns 7% of Dong.)
Pelle Dragsted, a spokesman for the Left-Green Alliance, described the whole transaction as hopeless and the initial sale to Goldman as scandalous.
An investigation into Goldman’s investment in Dong by Denmark’s National Audit Office is still under way. The purpose of the investigation is to find out whether Dong was sold too cheaply in 2014.
The political attention Goldman’s share sale is attracting shows Danes are still wondering whether they were shortchanged three years ago. Former prime minister Poul Nyrup Rasmussen has led the camp of critics who say the nation was cheated.
The finance minister at the time, Bjarne Corydon, said Dong was losing so much money that other investors were not willing to inject funds into the company on terms that were acceptable to the government. He brought in Denmark’s two biggest pension funds, ATP and PFA, as joint owners and the government kept more than half the shares.
Dong has stopped haemorrhaging money and on Thursday, it reported 2016 operating profit that almost doubled, with the shares gaining about 7% since the company’s initial public offering in June 2016.
Kristian Jensen, Denmark’s current finance minister, says the company “was strengthened by the capital injection”.
Michael Bruun, an MD at Goldman, said Goldman Sachs “is proud to have contributed to Dong Energy’s growth”. It decided to sell part of its stake “following the company’s strong financial results”.
Rene Christensen, who sits on the parliament’s finance committee as a representative for the Danish People’s Party — the biggest group in the ruling bloc of Prime Minister Lars Lokke Rasmussen — says it is impossible to know whether Dong would have recovered so well without Goldman.
The party backed Goldman’s investment in part because “the message was that Dong was in trouble and if we didn’t do anything, it would be a catastrophe”, Christensen said. “But history has shown that Dong would still be here today” even without Goldman’s capital injection.
The question is whether such a transaction will be allowed again in Denmark. Goldman hired another former Danish prime minister, Anders Fogh Rasmussen, to help it navigate through the political storm that followed its Dong investment.
Dragsted said the process had been a lesson for Danish politicians in how not to handle foreign investment.
Christensen said: “There’s definitely a lot to learn from this case. If I were in the same situation today, I’d definitely ask a lot more questions.”
THE LEFT-GREEN ALLIANCE DESCRIBED THE TRANSACTION AS HOPELESS AND THE INITIAL SALE TO GOLDMAN AS SCANDALOUS