Target Information

Sif Holding N.V. ("Sif" or the "Company") has made a definitive decision to invest €328 million in constructing the world's largest monopile foundation manufacturing plant located in Rotterdam, Netherlands. Scheduled to begin construction in April 2023, the facility aims to significantly enhance Sif's manufacturing capacity to 500 kilotons annually and enable the production of 200 XXXL monopile foundations each year, characterized by a diameter of 11 meters and a weight of 2,500 tons.

Upon reaching full production capacity in mid-2025, Sif forecasts an EBITDA of €135 million for 2025, escalating to a minimum of €160 million annually starting from 2026, indicating a payback period of approximately 3 to 4 years. The company has secured commitments for 348 kilotons of production from initial customers, including Ecowende, a collaboration between Shell and Eneco, contributing to a total orderbook of 662 kilotons.

Industry Overview in the Netherlands

The offshore wind sector in the Netherlands is experiencing a robust growth trajectory, bolstered by increasing governmental and societal demand for renewable energy solutions. Substantial studies indicate a sustained preference for monopile foundations in offshore wind farms, prized for their reliability and cost-efficiency. As the industry infrastructure evolves, the expected demand for monopiles, particularly those varying between 9 to 11.5 meters in diameter, is projected to rise sharply as new wind projects are developed.

Sif Holding has emerged as a pivotal player within this market, having manufactured over 2,500 monopile foundations that collectively support nearly 12 GW of operational offshore wind energy over the last two decades. The company’s established credibility and experience position it well to navigate and address the operational complexities that accompany the changing dimensions of monopile requirements in this rapidly growing sector.

Moreover, recent trends in enhanced political backing for cleaner energy transition initiatives align closely with the operational objectives of firms like Sif. The growing portfolio of offshore wind projects signals a crucial shift towards sustainable energy solutions, positioning companies at the forefront of this transition to capture significant market share.

Additionally, strategic partnerships with large corporations and consortiums are likely to drive greater stability and accountability within the industry, securing additional opportunities for manufacturers in the renewables supply chain. Sif's commitment to optimizing its production processes and sustainability measures, including reducing greenhouse gas emissions and utilizing green energy, reflects an alignment with current energy strategies and a commitment to environmental stewardship.

Rationale Behind the Deal

This investment decision is rooted in Sif’s objective to consolidate its leading position as a provider of monopile foundation solutions in a rapidly expanding offshore wind market. By building the largest monopile manufacturing plant, the company aims to enhance operational output and innovate manufacturing capabilities, thereby responding to the increasing demand for efficient offshore wind construction.

The backing from significant clients—such as Ecowende and Equinor—demonstrates strong market confidence in Sif’s future prospects. The secured orders and long-term capacity reservation agreements reflect Sif's strategic foresight in aligning its production capabilities with anticipated market growth.

Investor Information

The investment is supported by a comprehensive financing plan, including €100 million in advanced factory payments from launching customers, €50 million from Equinor in preferred equity, and an additional €50 million in common equity expected from a fully underwritten rights offering led by Sif’s largest shareholder, Egeria. Furthermore, the plan incorporates operational leases amounting to €40 million and term loans of €81 million from Invest-NL and a consortium of commercial banks. Such diverse financial sources illustrate broad confidence from investors in Sif's strategic direction and market potential.

Egeria has expressed unwavering support for the expansion project and its strategic goals, reflecting the importance of shareholders in driving growth within Sif. The commitment to underwrite the rights offering aligns with long-term visions for profitability and shareholder value enhancement.

View of Dealert

The decision to invest in the world's largest monopile foundation manufacturing plant appears to be strategically sound. Given the strong growth trajectory of the offshore wind sector in the Netherlands and beyond, Sif is positioning itself favorably to capitalize on increasing project demands. The anticipated EBITDA growth and the relatively short payback period mark this expansion as an appealing long-term investment.

Sif’s established track record, bolstered by notable partnerships with industry leaders like Ecowende and Equinor, enhances its credibility in the market and underscores the value of the commitments received. The existing orderbook of 662 kilotons not only provides immediate financial visibility but also emphasizes customer confidence in Sif's capabilities.

Furthermore, the attention to modern manufacturing technologies, cost-efficiency measures, and sustainability initiatives positions Sif as a forward-thinking company in a competitive landscape. The expected operational efficiencies and enhanced product offerings should contribute positively to the bottom line, further reinforcing the investment's merit.

In summary, this expansion not only solidifies Sif's competitive advantage but also sets a transformative precedent within the sector, making the investment a compelling opportunity for both existing and prospective shareholders.

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