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Drilling company Iceland Drilling acquired by Icelandic investment fund

Drilling Rig Odinn on location in Iceland, Iceland Drilling (source: Iceland Drilling)
Alexander Richter 15 Jan 2012

Icelandic investment fund SF III buys 82% stake in Icelandic geothermal drilling company Iceland Drilling (Jardboranir) in an open sales process run by Icelandic bank Islandsbanki.

Announced yesterday, the sales process of a majority stake in Icelandic geothermal drilling company Iceland Drilling (Jardboranir) has been closed.

The buyer is an Icelandic investment fund called SF III. This closes a chapter of many years of the company having been held by financial institutions throughout the turbulent times of boom and bust of the Icelandic financial markets.

SF III slhf., an investment fund operated by Stefnir hf., has signed an agreement to acquire an 82% stake in Jarðboranir hf. (Iceland Drilling) from Miðengi ehf., a subsidiary of Íslandsbanki hf. The company was previously owned by Geysir Green Energy and in the process of the dissolving of the company, Íslandsbanki took over the ownership and started the sales process.

The owners of SF III are three pension funds, Festa, Gildi and LSR as well Samherji hf., and SÍA I, private equity fund operated by Stefnir hf. Miðengi ehf. will continue as a shareholder in the company and own an 18% stake. The share purchase agreement is subject to a number of conditions, including but not limited to the approval of the Icelandic Competition Authorities.

Miðengi ehf. commenced an open sales process of Icelandic Drilling in August 2011 with Íslandsbanki Corporate Finance as the advisor. The sales process was publically announced and a large number of offers were submitted from both domestic as well as international investors. The owner subsequently initiated discussions with the highest bidder which were successfully concluded with the sale to SF III. No price was mentioned in this context.

In a first statement by Bent Einarsson, CEO of Iceland Drilling, he said: “We are very pleased to welcome a new major shareholder to the company. Their mission and values are a perfect match with the company‘s current strategy and the headquarters will stay in Iceland. Active ownership is an important prerequisite for Iceland Drilling’s further success. In this perspective we continue to explore projects in foreign markets and the opportunities that arise with increased focus on sustainable energy sources globally”.

Given the company’s activities in mostly international markets, the company was an popular acquisition target for various Icelandic investment groups that are looking for opportunities despite the underlying foreign currency restrictions in Iceland.

It will be interesting how this will affect the company’s strategy going forward, but with its experience and pipeline of contracts, it should be well positioned and having finally a clear ownership position should also be helpful going forward.

Currently the company owns subsidiary Hekla Energy, a drilling firm in Germany and runs projects in New Zealand, Dominica and Iceland, with its eyes on various other markets going forward.

Source: Iceland Drilling