By Nora Buli and Jacob Gronholt-Pedersen

OSLO/COPENHAGEN (Reuters) -Norway’s Equinor has bought a 9.8% stake valued at around $2.5 billion in Danish offshore wind farm developer Orsted (CSE:), it said on Monday, as it seeks to build up its renewables portfolio.

Orsted shares have dropped 69% from their 2021 all-time high as the offshore wind sector has faced surging costs and technical problems with turbines.

But Equinor said its share acquisition was a long-term bet on the sector, after the Norwegian company made slow progress on reaching its ambitious renewable energy targets.

The transaction would count towards Equinor’s renewable energy portfolio target, adding 1.7 gigawatt (GW) of net generation capacity out of the company’s goal of installing 12-16 GW by 2030, CEO Anders Opedal told Reuters.

At the end of 2023, the company had less than 1 GW of installed renewable capacity.

“We see this as a good counter cyclical move at this point in time to get into a very attractive portfolio,” Opedal said.

Orsted’s share price rose more than 8% on the news before paring gains to stand 5.8% higher at 1300 GMT. Equinor’s shares fell by 3.9%.

An Orsted spokesperson declined to comment.

Equinor said it did not plan to raise its stake beyond 10% and would not seek board representation.

The world’s biggest offshore wind developer was last year hit by costs and project delays as inflation raised the price of turbines and other equipment and services.

“The offshore wind industry is currently facing a set of challenges, but we remain confident in the long-term outlook for the sector, and the crucial role offshore wind will play in the energy transition,” he said.

Equinor’s ownership position was built over time, through a combination of market purchases and a block trade, the company said.

The investment makes Equinor the second largest shareholder in Orsted after the Danish government.

Battling to restore investor confidence, Orsted in February trimmed its investment and capacity targets and paused dividend payouts as part of a major review.

“Structurally, this doesn’t change anything for the direction Orsted is heading,” Sydbank analyst Jacob Pedersen said.

The company has broad political backing in Denmark with no signs that the state will relinquish its 51% stake, he said.

Denmark brought in Goldman Sachs as a strategic shareholder 10 years ago, when the company – formerly DONG Energy – was focused on oil and gas. The Wall Street bank doubled its 8 billion-crown investment just two years later, when Orsted listed in Copenhagen in 2016.