Shareholders invest 600 million euros in Alliander

3 December 2021

Network company Alliander has strengthened its financial position by 600 million euros. 70 out of 76 shareholders, representing a total of 99.5% of the issued share capital, accepted Alliander’s request to invest in a future-proof energy network. With its strengthened capital position, Alliander will be able to further expand the electricity grid in the coming years.

This expansion is desperately needed, because with the energy transition, economic growth and housing construction plans, there is an increasing demand for electricity. Taken together, these developments call for billions of euros in investments in the power grid. With their investment, the shareholders are making a major contribution to realising the energy grid of the future. The official date of issue for the shares is 15 December.

‘Serious boost’

Chair of the Management Board Maarten Otto is pleased that virtually all shareholders are prepared to invest in Alliander. ‘After an intensive process, I am delighted that our shareholders are willing to strengthen our capital position. In doing so, they are giving us a serious boost in tackling the task before us. It means that we can continue to work on a reliable, affordable and accessible energy network and that we are jointly committed to achieving the climate goals. All our activities are aimed at moving forward in shaping the energy system of the future, and so I am very grateful for the confidence that shareholders have placed in us.’

Strengthening the financial position

‘Alliander has a healthy financial position, but will have to invest billions of euros in the coming years given that the electricity grid is reaching its limits due to the growing demand for electricity,’ says Alliander CFO Walter Bien. The energy transition, economic growth, the enormous housing construction task and the rapid digitalisation of society all mean that the electricity grid is reaching full capacity in more and more places. Though Alliander is working hard to address the shortage of capacity on the grid, new connections cannot always be realised right away. Nor is it always possible to feed green energy from solar and wind farms into the grid. To meet the demand for electrical capacity, Alliander will have to invest more than one billion euros per year over the coming years. That is why it is necessary to strengthen shareholders’ equity, in order to maintain a healthy financial position. And that is what is happening now with the funds the shareholders are making available. This allows the network company to finance its investments at acceptable costs.

Advantages

The investment made by the shareholders concerns a reverse convertible hybrid shareholder loan. Such a loan counts for 50% as equity on issue. Alliander is also entitled, in due course, to convert all or part of the loan into shares under certain conditions.

‘This sort of instrument has many advantages, both for the shareholders and for Alliander. Because we can already include 50% of this in our equity, this immediately strengthens our financial position. At the same time, the shareholders receive an interest payment, in addition to a dividend payment, on the existing shares,’ explains Bien. The interest rate is calculated based on the 10-year interest rate at the time of issue plus a markup of 1.975%.

Additional steps

In May this year, Alliander asked its shareholders for a financial contribution to strengthen its shareholders’ equity. In addition to this contribution, additional steps are required to find a lasting solution to addressing the financing task. It is with this in mind that Alliander continues to work on an agile, effective and cost-efficient organisation. Exploratory talks are also under way between network operators, the shareholders and the Dutch national government about whether and how the central government can help meet the capital requirements of regional network companies.