Confident boss but media not so sure -- Iberdrola flotation

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Despite a wobbly start, the third week of trading on Madrid's stock exchange by the world's biggest wind operator, Spain's Iberdrola Renovables, finished with the share price up nearly 20% to EUR 6.31. Over the following week, however, share value fell almost continually to hover just above the starting price.

The renewables division of Spanish utility Iberdrola debuted on December 13, 2007, with a public offering of 20% of the company, or 844.8 million shares, at EUR 5.30 a share. It turned out to be Spain's biggest ever flotation by a private company, raising EUR 4.48 billion. That outstripped previous record debuts by mobile phone giant Telefónica Móviles and fashion mogul Inditex, which raised EUR 3.8 billion and EUR 2.4 billion, respectively.

The size of the Iberdrola Renovables flotation created great expectations, accentuating media disappointment when share value fell by 2.83%, to EUR 5.15, on the first day of trading. Apparently unruffled, Iberdrola CEO and chairman Ignacio Galán -- who also chairs the renewables division -- shrugged it off as a bad day for European stock markets in general. The Madrid stock exchange index fell by 2.27%, the biggest drop since September. "It's not the day we would have wished for our debut," he says.

Short term confidence in the flotation remains high, he stresses, pointing out that the initial public offering was oversubscribed three times, with 400 investment funds and 300,000 private investors taking part. In support of his claim, Galán points to Iberdrola Renovables' intention to invest EUR 8 billion in achieving a renewables generation portfolio of 13.6 GW by 2010 (Windpower Monthly, December 2007), up from 7342 MW today, 7000 MW of that wind power. Half the investment needed already comes from the flotation. Over the past year, Iberdrola Renovables has increased its operating renewables capacity by 80%.

Fast expanding

The company is fast expanding internationally following last year's takeover of British utility ScottishPower, together with its US subsidiary PPM Energy, a major wind project developer in America. Just over half of the 41,200 MW of wind projects that Iberdrola has under development are for the US market, with 6600 MW for Spain, 6000 MW for UK and 7350 MW for the rest of the world.

"Iberdrola Renovables debuted at the end of a year with global renewables generating an overall investment of $100 million, an all time record," says Luis Merino of renewables publication Energías Renovables, referring to a report by research group, New Energy Finance. "Coupled with growing support for renewables from the EU, US and China, all major Iberdrola wind markets, the outlook could hardly be better."

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