ABO Wind needs more capital to fund projects as permitting speeds up

German renewables developer ABO Wind AG (ETR:AB9) is exploring options to raise capital such as a share issue and a change in the legal form in a bid to ensure the rapid implementation of an increasing number of wind and solar projects in Europe which are already shovel-ready.

The company's pipeline of projects that have reached the ready-to-build stage is increasing significantly thanks to faster permitting procedures. The trend is especially clear in Germany where ABO Wind obtained permits for more than 70 MW of wind energy capacity in the first five months of 2023 and expects this figure to reach at least 200 MW by the end of the year.

The construction of so many projects at the same time requires much liquidity as the construction phase is capital intensive.

Apart from Germany, ABO Wind needs capital for the construction of its 87-MW Pajuperänkangas and 30-MW Illevaara wind projects in Finland, which is planned to begin at the end of 2023.

The developer is also preparing to break the ground on its first turnkey solar projects in Latin America -- two solar systems each of about 10 MW in Colombia.

"In order to fully exploit the favourable and improving conditions for renewable energies, we are considering various financing options, including issuing new shares," managing director Alexander Reinicke said last week.

In addition to a share issue, the company is considering a change of legal form into a partnership limited by shares which is abbreviated in German as KGaA. This will give the developer more opportunities on the capital market, it claims. The boards will decide in the next few months whether to propose the transformation to the General Meeting.

A decision on a capital measure is yet to be made.

The plan for a legal form change has drawn the criticism of activist investor and ABO Wind major shareholder Enkraft Capital GmbH as such a move would secure the influence of the founding families even if their participation in the limited liability capital were to fall below the threshold of a majority in the event of any capital increases.

"The KGaA is intended to significantly restrict the rights of other shareholders, while at the same time securing the founding families’ influence in the long term, even if they no longer hold the majority," Enkraft's managing director Benedikt Kormaier said in a letter seen by Renewables Now.

"There is no reasonable justification for this one-sided shift of powers in favor of the founding families and at the expense of the other shareholders," Kormaier added.

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