Enel Green Power SpA (EGPW.MI) shares fell Thursday on their first day of trading following Europe 's biggest initial public offering since the financial crisis began, as investors distance themselves from the renewables sector.

Institutional investors turned their back on the offering because the sector is facing cutbacks from governments running out of money to subsidize it and because they were unconvinced by an IPO where all the proceeds are pocketed by the majority shareholder to trim its debt pile.

At 1257 GMT, Enel Green Power shares were down EUR0.07, or 4.4%, at EUR1.53, compared with an IPO price of EUR1.60. At the same time, Italy 's benchmark FTSE MIb Index was up 1.6%.

Enel SpA (ENEL.MI) had hoped to raise EUR3 billion from the sale of a 32.5% stake in its renewables unit as part of a drive to slash net debt and avert a downgrade from credit agencies, but had to settle for EUR2.60 billion after cutting the IPO price.

Investors remain concerned the IPO proceeds will all be pocketed by Enel to reduce its debt pile, but Enel's strategy is in line with that of European utilities keen to slash debt built up in recent years on the back of economic prosperity.

At a press conference in Milan Thursday, Enel Chief Executive Fulvio Conti confirmed that net debt at the end of 2010 will drop to EUR45 billion, compared with EUR53.89 billion at the end of June. Conti also reiterated plans to sell the Maritza III coal plant in Bulgaria by the end of the year to raise further cash.

Enel Green Power executives remained upbeat about the company.

"Our fundamentals are good," Chairman Luigi Ferraris said Thursday at a press conference in Madrid . "It's the first time investors have in the market a renewable energy company present in four technologies [wind, solar, hydro and geothermal]."

Enel Green Power shares are listed in Italy and Spain .

Last week the Rome-based utility lowered its IPO price range to between EUR1.60 to EUR2.10 from EUR1.80 to EUR2.10 in order to attract more interest.

The IPO, which ended Friday, was the biggest in Europe in terms of money raised since Iberdrola Renovables SA (IBR.MC) in 2007, which raised EUR4.1 billion.

But it took place amid a climate of weak stock market performances by Iberian wind power companies, with the renewable energy sector roiled by subsidy cutbacks in newly fiscally austere Europe .

The low percentage of Enel Green Power's free float held by institutional investors also limits liquidity, considering retail investors tend to hold on to shares for a longer period.

"The share drop was expected considering so much [of the IPO] went to retail investors," said Gianpaolo Rivano, a fund manager with Gesti-Re SGR SpA in Milan . "The fact that few institutional investors hold the shares makes it less interesting."

Enel has said around 340,000 individuals in Italy and Spain placed orders for more than two thirds of the shares, while institutional investors ordered less than a third.

Enel Green Power's current market capitalization of EUR7.70 billion would make it the 13th biggest company in Italy .

In fact, Societe Generale said in a note Thursday that considering its free float, Enel Green Power could be a fast addition to the MSCI indexes by Nov. 17, as part of the MSCI review.

Enel Green Power has broad hydroelectric and geothermal assets that don't rely on subsidies and an unusually international reach, but the bulk of its planned growth is in wind power, where subsidies are important but increasingly uncertain.

The company expects to spend EUR5.2 billion in the coming years to boost its installed capacity of more than 5,700 megawatts by a further 3,500MW by 2014.

"The stock has the strength and capacity to grow and satisfy all investors," Conti said at the Milan conference.

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