Enel SpAhas
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,” saidPatrizio
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,” saidMassimo
Nibbia 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 itsdebtto
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 postearningsbefore 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.