Enel SpA plans to seek banks this month to advise on the initial public offering of its renewable energy unit, likely to be Europe’s largest since 2007.
Italy’s biggest utility may invite investment banks to bid to manage the IPO of Enel Green Power as soon as next week, Chief Executive Officer Fulvio Conti said in an interview in London yesterday. Rome-based Enel will select the firms by the end of April to enable the company to sell stock as soon as June, Conti said.
“The beauty parade will start soon,” said Conti. “It’s a matter of a week, a week or two.”
The sale of as much as 49 percent of the company may raise about 4 billion euros ($5.4 billion) for Enel, analysts said, based on the business’s forecast earnings. That would make Green Power the biggest IPO in Europe since the 4.5 billion-euro sale of Iberdrola Renovables SA. IPOs in Europe have been slower to recover than in the U.S. and Asia where economies have been quicker to return to growth, depriving investment banks of one of the most profitable businesses.
“The IPO market still feels weak,” Barclays Capital analysts said yesterday in a note on European investment banks. It would be good for banks and markets “if deals get done.”
Enel Green Power manages activities in wind, solar, geothermal, biomass and hydroelectric energy in seventeen countries in Europe and the Americas. The utility is selling assets to reduce debt to 45 billion euros from 51 billion euros.
Conti’s Value
Enel expects the renewable energy unit to post earnings before interest, tax, depreciation and amortization of 1.4 billion euros in 2011, up from 1.2 billion euros in 2009, the company said yesterday. Conti has said the unit may be valued at as much as 11 or 12 times Ebitda, including debt.
Green Power has current capacity of 5.7 gigawatts, which should rise to 9.4 gigawatts by 2014, primarily funded by cash generation, Conti said.
The unit’s IPO will take place by “June, September or October depending on market conditions,” Conti said yesterday at a press conference in London. Enel isn’t planning a capital increase for Enel Green Power, he said.
The company’s 2010 and 2011 projections “sound comfortable to us,” analysts at Equita Sim said in a note to clients yesterday. Debt will fall “thanks to 7 billion euros of asset disposals, which remain the main driver for the stock performance.”
Enel halved its dividend to 25 cents and said yesterday Ebitda will remain flat this year and next.
Net income rose 2 percent to 5.4 billion euros in 2009 on a 970 million-euro gain from the sale of renewable-energy assets to Acciona SA, Enel said in a statement. That beat the 5.1 billion-euro mean estimate of analysts surveyed by Bloomberg.