Enel opens green power arm’s I.P.O.

Enel is seeking to raise 3.4 billion euros ($4.8 billion) in the initial public offering of its green energy arm, as Italy’s biggest power company and the most indebted utility in Europe scrambles to cover its debts.  Enel (BIT:MI) will offer 28.3 percent of the shares in Enel Green Power until October 29, but it may raise the total available shares to 32.5 percent if the offer becomes oversubscribed.

Enel Green Power, which currently handles an installed capacity of 5,700 MW from a mix of wind, solar, geothermal, hydroelectric and biomass facilities, will reportedly list in Milan and Madrid in early November.

Enel put the value of Enel Green Power at a minimum of 9 billion euros to a maximum of 10.5 billion euros. At the minimum price range, each share is priced 1.80 euros apiece while the maximum price range translates to 2.10 euros.

Proceeds from the initial public offering will be used to reduce the power company’s burgeoning deficit, which has grown from 50 billion euros in 2008 to 51 billion euros in 2009.

Reports revealed that Enel had initially introduced a price range of 1.9 euros to 2.4 euros for each share of Enel Green Power, but the Italian power giant was forced to bring down the price target for the green energy company after investors called for lower rates.

Through the initial public offering, as well as other asset disposals, the company hopes to reduce its debt to 45 billion euros by the end of this year.

“We are continuing to pursue our deleveraging policy which will enable us to absorb the effect of Endesa’s acquisition and to maintain our commitment to reduce our net consolidated financial debt to 45 billion euros by the year-end,” said Fulvio Conti, Enel chief executive and general manager, in a previous statement.

The public offering comes shortly after Enel closed a couple of deals beginning September.

In September, the company finalized the sale of an 80 percent stake in its subsidiary Endesa Gas S.A. The sale rated Endesa’s gas transport and distribution assets in Spain at an estimated 1 billion euros and was expected to reduce the subsidiary’s consolidated financial debt by about 800 million euros.

The company also sealed a memorandum of understanding with IDGC Holding to develop advanced smart grid technologies in Russia.

Additionally, both companies are looking into various modes of cooperation in grid asset management, including the prospect of creating a joint company.



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