21 October 2010
Italian utility Enel has begun marketing shares in its renewable energy unit, in Europe’s largest initial public offering (IPO) since 2007 – and a key test of sentiment for the embattled clean energy sector.
The price target for shares in Enel Green Power (EGL) is €1.8-2.1 ($2.5-2.9), lower than a preliminary range of €1.9-2.4, but this still would value the unit at between €9 billion and €10.5 billion.
Enel aims to raise at least €3 billion from the sale, which it plans to use to pay down debt. The spun-off company is set to float on the Madrid and Milan stock exchanges on 4 November.
According to Bloomberg News, Enel management resisted advice from some of the investment banks advising it on the sale to reduce its target price even further.
The sale comes at a difficult time for the renewable energy sector. Earlier spin-offs of renewable energy units from European utilities have underperformed, while renewable energy indexes are lagging the wider market.
For example, Spanish utility Iberdrola’s renewable energy spin-off has halved in value since its December 2007 float, while Portugal’s EDP Renovaveis has fared no better – declining 47% since its initial public offering in July 2008.
And broader renewables indexes have also lagged the wider market. Year-to-date, the NEX WilderHill New Energy Global Innovation Index is down 15.6%.
Bank of America, Banca IMI, Barclays, Credit Suisse, Goldman Sachs, JPMorgan Chase, Mediobanca, Morgan Stanley, UniCredit and Banco Bilbao Vizcaya Argentaria are managing the EGL IPO.
EGL has more than 5.7GW in installed wind, solar, bi omass, geothermal and hydropower capacity, with more than 600 plants in operation or under construction, with hydroelectricity accounting for 2.5GW.
Mark Nicholls
