Enel GP IPO fully covered as minimum price cut

By Maria Pia Quaglia and Stephen Jewkes

MILAN (BestGrowthStock) – The initial public offering for Enel Green Power, Europe’s biggest in three years, was more than fully covered late on Thursday after the Italian power giant cut the minimum price to attract enough institutional investors.

Financial sources told Reuters early on Thursday Enel had dropped the minimum price for up to 32.5 percent of Enel Green Power (EGP) to 1.6 euros per share from 1.8 euros, raising the risk it could miss its target of raising at least 3 billion euros ($4 billion).

“The offer is well over 100 percent covered,” a source close to the matter said late on Thursday.

Earlier Enel, Europe’s most-indebted utility which is seeking cash to cut borrowings and protect its credit rating, confirmed the lower price, saying it would consider expressions of interest starting from 1.6 euros per share.

The new range of 1.6-2.1 euros would value the unit at 8.0 billion euros to 10.5 billion euros, meaning Enel would raise up to 2.6 billion from a sale at the minimum price if a greenshoe option is exercised.

Enel had already cut the price range from a preliminary 1.9 to 2.4 euros after some investors clamored for a reduction.

STRONG RETAIL

Sources told Reuters Enel was aiming to increase the size of the retail offer, now at a minimum of 15 percent of the total, toward a 50-50 split with institutional investors.

But a banking source close to the operation said it was too early to talk about the final split.

“A preliminary allocation will only be made tomorrow and technically there is time to Monday,” the source said.

The shares of EGP’s main rivals – Iberdrola Renovables, EDP Renewables and EDF Energies Nouvelles SA — have underperformed in the past 12 months, hit by green energy incentive cuts in Europe and U.S. climate change bill uncertainties.

A sale at 1.6 euros per share would give EGP an EV/EBITDA multiple of 8.5 times, based on estimated 2010 earnings.

Iberdrola trades at a EV/EBITDA multiple of 10.3, while EDP Renewables trades at a multiple of 10.1, UBS research showed.

While competitors focus on one or two main technologies, EGP has a more diversified mix, as well as a broader geographical footprint that could help reduce regulatory risk.

The unit’s exposure to incentives and subsidies, which account for some 28 percent of revenues, is less than peers.

($1=.7205 Euro)

(Additional reporting by Alberto Sisto and Kylie MacLellan; Editing by David Cowell and Jon Loades-Carter)

Enel GP IPO fully covered as minimum price cut