Ziton – finding security in offshore wind

Issue at a glance

Ziton is a Denmark-based specialist service provider to the offshore wind industry. It owns and operates jack-up vessels used primarily for operations and maintenance work, including major component replacement for offshore wind turbines.

The company has serviced more than two-thirds of all offshore wind farms in Europe across 88 wind farms in 1556 locations. As market leaders with a substantial track record, Ziton are well positioned to benefit from the EU’s electrification ambitions.

Business model: how Ziton makes money

The ongoing conflict in the Middle East has exacerbated this underlying vulnerability.  Electrification is a key part of the EU’s strategy to reduce this dependence, with renewable energy playing an increasingly important role in providing clean, homegrown electricity.

Ziton sits in a specialised part of the offshore wind value chain. Rather than developing or owning wind farms, the company provides the vessels and technical expertise required to keep offshore turbines operating. Its core role is in operations and maintenance, particularly major component replacement – the kind of work needed when turbine blades, gearboxes, generators or other large components require repair or replacement offshore.

In our view, this gives Ziton a distinctive business profile. The company’s relevance has grown as offshore wind has expanded across northern Europe.

What we are watching

For a holding like Ziton, ongoing monitoring is essential. The most important indicators are vessel use and cash flow conversion. Recent results have been strong, but the durability of those results matters more than any single year’s performance.

Ziton illustrates the kind of credit opportunity that can sit outside the mainstream corporate bond universe. It is not a household name issuer or a large investment grade borrower. Instead, it is a specialist company operating in a structurally supported market, with tangible assets, strong recent utilisation and a bond that offers meaningful income for the risk taken.

The investment case is therefore not simply ‘offshore wind is growing’. We believe that a stronger credit argument is that the installed offshore wind base requires ongoing maintenance: Ziton owns scarce specialist vessels that can provide that service. Recent utilisation and cash generation have been strong; and in our view the secured, shorter-dated bond structure offers a potentially attractive way to access that risk.

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