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Enel Values Green Power at Up to 10.5 Billion Euros (Update1)
2010-10-15 09:11:29.591 GMT
(Adds analyst quotes in the third, sixth paragraphs.)
By Alessandra Migliaccio, Elisa Martinuzzi and Francesca Cinelli
Oct. 15 (Bloomberg) -- Enel SpA has valued its renewable
energy unit at as much as 10.5 billion euros ($14.8 billion) as
it prepares Europe's largest initial public offering since 2007
to pay down debt.
Italy's largest utility is selling shares of Enel Green
Power SpA in Milan at 1.8 euros to 2.1 euros apiece, according
to a stock exchange statement. The Rome-based company will raise
as much as 3.4 billion euros selling 32.5 percent of company's
shares, according to the terms of the sale.
"The range is reasonable -- at under 2 euros we will
definitely buy," said Patrizio Pazzaglia, head fund manager at
Bank Insinger de Beaufort NV in Rome. "Utilities can be a good
investment at a time when interest rates are so low."
Enel is trying to attract investors by offering above-
average dividends for the sector. Enel Green Power will pay 30
percent of net income to investors, Enel Chief Executive Officer
Fulvio Conti said yesterday. Investors lost money on share sales
in Spain's Iberdrola Renovables SA in 2007 and Portugal's EDP
Renovaveis SA the following year.
"The dividend is good for the sector though low in
absolute terms," said Massimo Nibbi a fund manager at
Meliorbanca SpA in Rome.
Shares will be offered starting Oct. 18 and will begin
trading Nov. 4. The IPO is part of an asset disposal plan that
will help Enel reduce its debt to 45 billion euros.
Energy Mix
Unlike Iberdrola Renovables and other competitors that rely
on wind power, Enel Green Power has 44 percent of its power
capacity at hydroelectric plants scattered from Bolzano in
Italy's Alps to Potenza in the country's south. About 41 percent
of its capacity comes from wind and 13 percent from geothermal.
The business mix makes the company less dependent on state
subsidies that have helped fund wind and solar panels, investors
said. Italy's government reduced payments for solar power
projects this year. Spain may follow suit.
Analysts at Intesa Sanpaolo's Banca IMI SpA, which is
helping to manage the IPO, predict that Enel Green Power will
post earnings before interest, tax, depreciation and
amortization, or Ebitda, of 1.3 billion euros this year, up
about 8 percent from last year.
The company's debt should rise to no more than 4.3 billion
euros in 2012 and installed capacity should rise by 9 percent
annually, Intesa said. They estimate installed capacity to rise
from 5,900 megawatts this year to 8,900 megawatts in 2014.
Bank of America Corp., Intesa Sanpaolo's Banca IMI SpA,
Barclays Plc, Credit Suisse Group AG, Goldman Sachs Group Inc.,
JPMorgan Chase & Co., Mediobanca SpA, Morgan Stanley, UniCredit
SpA and Banco Bilbao Vizcaya Argentaria SA are managing the IPO.
For Related News and Information:
Renewable energy top page: GREEN <GO>
Top Italy stories: TOP IT <GO>
Top energy: ETOP <GO>
--Editors: Alex Devine, Will Kennedy.
To contact the reporters on this story:
Elisa Martinuzzi in Milan at +39-02-8064-4218 or
emartinuzzi@bloomberg.net;
Alessandra Migliaccio in Rome at +39-06-4520-6320 or
amigliaccio@bloomberg.net.
To contact the editor responsible for this story:
Will Kennedy at +44-20-7073-3603 or
wkennedy@bloomberg.net.
