Ideol S.A. (BWO) Earnings Call Transcript & Summary

Okay. Good morning, everyone. It's 10:00 CET, and I'm delighted to introduce CEO, Marco Beenen, BW Offshore; and Paul de la Guérivière, CEO of Ideol, for a presentation of the transaction announced this morning, creating BW Ideol, which will be one of the early movers in floating offshore wind. As there are more than 100 participants, I'll put everyone on mute, but you can ask questions through the chat or raise your hand for questions after the presentation. And with that, I'll leave the floor to Mr. Beenen and de la Guérivière.

Okay. Sorry. Thank you. My name is Marco Beenen, CEO of BW Offshore. And I jointly present today together with my colleague, Paul Dupin de la Guérivière, CEO of Ideol. We can go to the next slide, which is our disclaimer. Please note -- see if this slide moves. Yes, and then we go to the first slide. We are excited to announce today that BW Offshore and Ideol have agreed to team up and form a leading global integrated floating offshore wind company, which we will call BW Ideol. BW Offshore will own about 50% of the new company, and we will accelerate BW Ideol's growth and value creation potential as an industrial partner. We target a completion of the private placement and listing by the end of the March -- end of this -- end of March. And we will then be an anchor investor. BW Offshore will be the anchor investor in that process. Both the founders, including Paul, as BW Offshore will remain long-term owners post the listing. Next slide. We run 2 very complementary businesses, which are both very relevant to develop large-scale floating wind projects. Ideol brings proven and market-leading patented floater technology, and they have already delivered a unique track record with operational assets in France and Japan. And this floater technology is both innovative and also scalable, which will drive costs down. Ideol has an experienced team which has been built up over the last 10 years, and it has developed a global project pipeline and partnerships. BW Offshore, we will bring deepwater offshore experience. We have delivered more than 40 large-scale offshore projects during the last 4 decades. We will put our global organization behind BW Ideol, including our global supply chain setup as well as our financing capabilities and our Investor Relations setup. Going to Slide 5, a few words about the market that we see for floating wind. As you know, renewable energy will grow significantly in the coming decades to drive the CO2 emissions down, and 1/3 of those anticipated CO2 emissions reductions will have to come from renewable energy. And renewable energy is expected to provide about 60% of the global electricity generation by 2050. Of that, offshore wind will take the largest portion. To unlock that potential, we believe that floating wind solutions will be required to scale up to those capacities. And then next slide, you see the portion of floating offshore wind will be -- will exceed the bottom fixed offshore wind, in our view. And that's -- the reason is that it is the more scalable renewable energy resource. It has basically unlimited potential to expand. Floating wind will benefit from superior wind conditions. It's also easier to scale up with larger turbines, and it is easier to scale up the number of floaters because it's easier to install them. It's expected that the floating wind over time will cover about 70% to 80% of the offshore wind market. With that, I hand over to Paul, who will explain you a bit more about the Ideol floater technology as well as the strategy for BW Ideol. Over to you, Paul.

Thank you, Marco. Next slide. So my name is Paul de la Guérivière. I'm the CEO and Founder of Ideol. Very pleased to be with you this morning for this announcement. As Marco presented, the BW Ideol will combine, on one side, Ideol unique floating offshore wind technology, our leading position of Ideol in this market that is taking roots on this proven technology, on the fact that we have 2 demonstrator in operation for more than 2 years, confirming a fully proven technology, demonstrating our position on 2 key markets for floating wind, both France and Japan. We have a unique house that has been built over a period of time of 10 years,with a fully integrated team, highly experienced. And we have bid recently a sizable project pipeline as codeveloper in all the key markets for floating wind, in Japan, in Europe and also in the U.S. Next slide. The new entity will leverage also BW Offshore experience, an extensive track record in designing and operating offshore assets, with more than 40 years of offshore energy assets experience, with the successful execution of more than 40 FPSO projects, with the ongoing operation and active fleet of 10 units, building on an extensive team with substantial offshore engineering, installation and operation capabilities. Next slide, please. This unique combination aims to transform the early-mover position of Ideol into a market leader. This transformation will rely on the high value-add of the new entity in engineering, technology license, execution and maintenance, under which we'll rely to serve a strategy that is uniquely positioned as the long-term asset owner through project development and wind farm ownership on one side and through floater EPCI and maintenance services on the other side with ultimate goal to provide floater leasing. Next slide, please. So in a nutshell, BW Ideol is in a unique position to become a floating offshore wind champion that intends to be positioned on around 10 gigawatt of project by 2030 via an extensive pipeline and partnerships with others. Based on the proven and unique and patented floating technology, reinforced by BW Offshore competence and global platform, serving an integrated business model strategy covering the full asset life cycle of floating wind assets. I think next slide is for Marco. You are on mute, Marco.

Yes. Ever after 1 year of COVID practice, I manage to put myself on mute. But I will finish with one slide summarizing the details on the transaction. So BW Offshore will invest EUR 60 million with the aim to attain about 50% ownership in BW Ideol post to contemplated capital rates and the listing of BW Ideol as a separate company on Euronext Growth. The investment itself and participating in the private placement, anchor investors will be funded by our existing liquidity capacity. And then BW Ideol founders and employees will hold about 20% of the capital raise post capital raise and lead the company forward, backed by BW Offshore. We target to have this capital raise and listing done before the end of March. This concludes the presentation. But -- and Paul and I will be happy to take any questions. But before we go there, we would like to show you a short video about the floating technology and construction methods. [Presentation]

Hello?

Yes, we can hear you, sir. I think it's time for a Q&A. [Operator Instructions] Marco and Paul, do you want me to read out the questions? Or do you see them yourself in the chat?

No, I don't see them. So if you could read them out, Frederik, it would be appreciated.

Great. So first question is from Øystein Vaagen asking if the floater design is restricted by a max turbine size. And also, what is the benefit of having a square-like floating structure versus other designs in the market?

So our design is not restricted by the wind turbine size. It has been designed from day 1 to be adapted to the very large combined coming to the market. So we are currently entering 2 commercial tenders with 10 to 16 megawatt wind turbine, and we have a design that is lettable for even wind turbine of 20 megawatts. So it's one of the key advantages of our technology, its capacity and its adaptability for even very large wind turbine.

Great. And is there any benefit of a square foundation rather than other designs in the market?

We have -- one of the key challenges of floating wind is to try to combine stable solutions in order to not impact the wind turbine production and, at the same time, to have cost-effective solutions. So our design with -- that is patented, that relies on the moon pull, that intends to stabilize the platform, give us a unique opportunity to combine very compact and steeper solutions and, at the same time, sufficiently stable to not impact the wind turbine production, as it is proven on our demonstrator, where we have absolutely no impact on the wind turbine power curve and on the wind turbine availability.

That's great. And then there's a question from Teo Soo Ming Angeline asking if the technology is already adopted and where and how is the pipeline of projects.

So the technology is already in operation in the 2 main market for floating wind, that is France and Japan. We have 2 units in operations since September 2018 in both markets: offshore, the West Coast in France and in the South part of Japan, with a very unique track record and a very proven feedback. We have even faced typhoon in the South part of Japan. We have faced several typhoon without any impact on the floater. And we are -- we'll disclose details on the pipeline of projects in the next detailed meetings with the investing community. Obviously, we are going to be positioned -- we are already positioned on coming tenders in Scotland, in France for south Brittany. There is a tender in Norway, and there will be upcoming tenders in California and in Japan.

That's great. And a question from my side. I understand Ideol is mostly about technology historically, but now the new company will move also into a developer role. And how do you see the benefits of having in-house technology versus being able to source agnostically? I guess this is maybe for Marco.

Yes. Well, I think the -- there is a 2-track here. I think we -- with the technology, we can position ourselves in a supplier, an EPCI role for development. But we also have the ability to team up in consortia, taking a leading role in consortia and developing projects and develop those projects ourselves all the way up to operation. So I think it gives more flexibility in our business model and value creation to actually own the technology.

And to follow-up on that from BW Offshore perspective, you have previously cited intention to take on new FPSO contracts this year. Is that impacted by this investment?

No, not really. Of course, we are making this initial investment. But the reason we are going straight for a listing is -- I think the company is mature enough, the combination of the 2 companies is mature enough to go straight away into a listing. And by doing that, the company can also grow relatively independent. So the strategy for BW Offshore is to have a 2-track approach where, as we have announced, we are focusing on securing an attractive new FPSO project in 2021. But in parallel, we're launching a renewable energy track to capture the opportunities in energy transition and apply our competence and capabilities that we have as a global offshore company to this new segment. And so by making this combination, we're leveraging both the competence of Ideol as well as the access to equity in the capital markets and attractive debt financing as well. So in that way, I think these 2 tracks are complementary, not instead of each other. So we're following a 2-track approach here.

Okay. And in terms of transaction, you indicated a EUR 60 million investment and an ownership 50% post deal and the management and founders retaining a meaningful stake as well. So could you sort of give an indication of the price? It seems to be having a fairly low entry ticket.

Well, we have an opportunity to make this investment. And after that, we think this -- we can grow the valuation of this company rapidly, in particular, as we will mature the pipeline of projects. So I think it's an attractive deal for all parties and including the new investors.