ABO Energy GmbH & Co. KGaA
ABO Wind AG: Change of legal form to partnership limited by shares would open up great potential

Change of legal form to partnership limited by shares would open up great potential

The Managing Board is convinced that the considered change of the legal form of ABO Wind AG (stock corporation) into a partnership limited by shares (abbreviation in German: KGaA) would open up new perspectives for the company and open up considerable further share price potential for long-term oriented shareholders. “We are currently experiencing an impressive acceleration of the energy transition worldwide,” emphasises Managing Board spokesman Dr Karsten Schlageter. The International Energy Agency expects renewable energy power plants with a capacity of around 2,400 gigawatts to be installed in the next five years. Before that, it took 20 years to install the same capacity. As a project developer with more than 1,000 employees and great expertise in the key technologies of wind energy, photovoltaics, battery storage and hydrogen, ABO Wind is predestined to help shape this rapid development. In order to connect as many wind farms, solar parks and storage facilities to the grid as quickly as possible, an even stronger capital base would be helpful.

“We have increased our debt and mezzanine capital in recent years,” explains Dr Schlageter. Looking ahead, it would be good if ABO Wind had the opportunity to grow in equity capital as the third pillar of financing. “In the current environment, capital increases averaging around 25 million euros a year could help us in the next few years,” says Schlageter. In addition to growth in the development of projects until they are ready for construction, ABO Wind could thus also implement significantly more and larger wind and solar parks on a turnkey basis in the future. Provided that other factors such as land provision, approval processes and delivery times for turbines also develop positively, with a strengthened equity base, ABO Wind could achieve a doubling of its annual net profit already in 2027 to around 50 million euros. In 2022, the most successful financial year to date, the group had reported an after-tax profit of more than 20 million euros for the first time. Slide 26 of the investor presentation (https://www.abo-wind.com/media/pdf/flyer/IR-Presentation.pdf) visualises a range of the expected development of total output and net profit. Dr Schlageter is convinced: “Once we have strengthened our equity base, we will be able to make much better use of the potential available to us in the current environment.”

“The families of the company’s founders, Dr Jochen Ahn and Matthias Bockholt, have declared that as majority owners they want to maintain their formative influence and not allow their shares to be diluted below 50 percent – this currently limits the possibilities for further capital increases,” says Dr Schlageter. In this situation, the Managing Board sees a change of legal form to a partnership limited by shares as a means of choice. The loss of influence that the families would suffer with a dilution below 50 percent would be partially compensated by the change of form. The families would then be willing to agree to further capital increases. An Ahn & Bockholt family company as general partner could determine the management of a future partnership limited by shares. Compared to the status quo, the minority shareholders’ influence would nevertheless be strengthened. This is because in a partnership limited by shares important decisions, for example on the use of the annual profit or future capital increases, are also subject to the General Meeting. For such decisions, the founding families would then be more dependent on the support of the minority shareholders than they are today.

Although the share price initially fell after the publication of an ad hoc announcement (https://www.abo-wind.com/en/company/ad-hoc-announcements.html) on a possible change of legal form, the Managing Board is convinced that the advantages for all shareholders outweigh the disadvantages. First, the moderate capital increases that will then be possible improve the prospects for rising earnings per share. Second, the dilution of the founding families strengthens the influence of the minority shareholders in the General Meeting and third, the share price benefits from growing free float, higher liquidity and a stronger focus on the capital market. Insofar as ABO Wind would open up the possibility of future capital increases through a conversion into a partnership limited by shares, it would be worthwhile for the company to create access to further investors. In that case the entry into the regulated market would also be an obvious option. However, this can only be accomplished in the medium term, because additional accounting according to international standards (IFRS) in particular requires considerable effort.

Establishing ABO Wind as a family-managed company contributes to operational success and corresponds to the wishes of many employees. “Our corporate culture is shaped by the values and goals of the founding families,” emphasises Dr Schlageter. The desire to contribute to the energy transition and climate protection motivated Dr Jochen Ahn and Matthias Bockholt to found ABO Wind 27 years ago. The same motivation still inspires the staff today. “Preserving the families’ influence on the fate of ABO Wind strengthens the bond between our best employees and the company.” This is an important factor in times of a shortage of skilled personnel.

The company’s characteristic ability to make decisions quickly and unbureaucratically in project and country groups is also to be preserved. “In our processes, it is the technical expertise and the arguments of the colleagues that count, not the hierarchical position,” says Dr Schlageter. This must be preserved in order to continue to develop and build renewable energy projects efficiently. However, it is also clear that the influence of the founding families should be linked to their financial commitment. It is therefore planned to link the general partner function of the families to a minimum share in the limited partnership capital in the articles of association of the partnership limited by shares which are still to be drawn up. It would be conceivable that the general partner would lose its powers as soon as the share of the general partners in the limited partnership capital falls below a threshold yet to be determined.

These and other questions are to be worked out in detail in the coming weeks and months. Until then, it is also important for the ABO Wind Managing Board to give investors and interested parties an understanding of the considerations regarding the change of legal form. To this end, a first video discussion in German with Dr Jochen Ahn, one of the founders and Board members of ABO Wind, is already planned for next Tuesday, 13 June, at 10 am. Interested parties can register for this by emailing presse@abo-wind.de and will then receive a link to dial in.