Time to invest in Denmark's wind energy industry sub-suppliers?  

2008.08.04
The establishment of a new fund to buy into Danish wind energy sub-suppliers highlights the opportunities for investors in a fast growing industrial segment with powerful potential
To the global investor, Denmark has what can be described as a peculiarly paradoxical profile. It is a small country, representing barely a thousandth of the world's population. But in certain key global industries, like international shipping and wind energy, it is anything but small. Denmark's merchant shipping fleet currently accounts for a whopping 10% of global trade, while Danish firms like Vestas and Siemens Wind Energy have collectively carved out a dominant global market share - Vestas alone currently has 23% of the world market for installed wind turbines.
 
That's one aspect of Denmark's small-but-big paradox. Another aspect is the fact that Denmark is a nation with a large number of SMEs (small and medium size enterprises). This is particularly the case in the shipping and wind energy sectors, where scores of thriving and profitable sub-suppliers have sprung up to provide the countless components that are packed into modern Danish ships and cutting edge Danish wind turbines.
 
This undergrowth of sub-suppliers is an attractive garden for astute investors to cultivate. And it is precisely the reason why the Aarhus-based investment company Evo has established a new fund ­– Evo Energy – with the aim of buying up Danish sub-suppliers to the wind energy industry. According to an article in financial daily newspaper Børsen, Evo plans to use up to DKK 4bn (USD 835m) to buy up companies in this fast-expanding industrial sector.
 
Danish sub-suppliers to the wind energy industry last year generated revenues of around DKK 42bn (USD 8.8bn), evidencing a growth rate of more than 9% according to figures from the wind energy industry's association.
 
Fernandino Becalli-Falco, the next-in-command of General Electrics, recently commented to Børsen that the supply squeeze on components to wind turbine manufacturers, that is currently restraining the growth potential of the wind energy industry, will lead to consolidation and further growth among the world's sub-suppliers in this sector – of which Denmark has a sizeable share.

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