The sale of up to 32.5% of EGP could bring in as much as €3.4billion for the utility, in what is expected to be largest IPO in Europe since Spanish wind giant Iberdrola Renovables went public in December 2007.
Enel shares will be offered to both retail and institutional investors at a targeted price of €1.8 to €2.1 per share, valuing 100% of EGP at between €9billion and €10.5billion.
This is down from a pre-marketing range valuing EGP at as much as €12billion. The offer will run through October 29 and the final price will be announced at the conclusion of the offering. EGP shares should begin trading on Milan and Madrid stock exchanges on November 4.
The Italian utility believes one of EGP's selling points it is more diversified than competitors like Iberdrola Renovables, France's EDF Energies Nouvelles and Portuguese firm EDP Renovaveis, all of which have seen their share prices fall since being listed in recent years.
Enel argues its diversification, both in terms of geography and its power generation mix, reduces the
regulatory and technological risks inherent in concentrating strongly on one area or sector.
Enel says 41% of total EGP's installed capacity of 5.8GW as of June 30, 2010 came from wind energy, with 44% from hydroelectric power, 13% from geothermal and 2% from other sources. EGP is present in 16 countries.
While it plans to maintain a diversified portfolio, the company has indicated that wind energy will become the most important generation source in coming years.
Eighty-two percent of 1.2GW in EGP projects under construction as of June 30 were wind farms and 90% of its 29.9GW pipeline is in wind energy. EGP plans to invest €5.2billion in the 2010-2014 period as it targets installed capacity of 9.2GW by 2014.
Along with other asset sales, the company says the IPO should allow the utility to reduce its net debt to €45billion, a target agreed upon with ratings agencies.
Enel chief executive Fulvio Conti stresses that the payout for new investors in EGP will be attractive, pledging that at least 30% of EGP's net profit will be redistributed to shareholders in dividends.
In 2009, EGP posted net income of €453million on earnings before interest, taxes, depreciation and amortization (EBITDA) of €1.3billion and total revenues of €2.1billion.
