UPDATE 4-Enel cuts unit’s IPO range — sources

* Premarketing price range was 1.9-2.4 euros a share

* Price range values Green Power at up to 10.5 bln euro

* Technically possible range could be reviewed-source

* IPO will meet muted response unless cheap-fund manager

* IPO price to be announced on Oct. 15-CEO
(Recasts lead, adds sources on price range)

By Stephen Jewkes and Alberto Sisto

MILAN/ROME, Oct 14 (BestGrowthStock) – Italian utility Enel SpA(ENEI.MI: ) has set the price range for the initial public
offering of its unit, Enel Green Power (EGP) at 1.8-2.1 euros
per share, below a premarketing range, sources close to the
deal said on Thursday.

The range values Enel’s renewable energy arm at up to 10.5
billion euros ($14.78 billion) and the planned market sale of
up to a third of EGP will make it Europe’s biggest IPO this

Enel, Europe’s No.2 utility by installed capacity, had set
a premarketing price range of 1.9-2.4 euros per share for EGP,
sources familiar with the deal told Reuters, adding the unit
has 5 billion shares. [ID:nLDE6941TA]

“The range is 1.8 to 2.1 euros per share,” a source
familiar with the deal said after a meeting between the company
and bankers to set the final IPO range, confirming what two
banking sources also said.

One of the banking sources added the range could still
theoretically be reviewed. Earlier on Thursday, Enel Chief
Executive Fulvio Conti said the final price range will be
announced on Friday.


Graphic on EGP http://r.reuters.com/nam22p

Graphic on EGP mix vs peers http://r.reuters.com/wup38p

Graphic on indebtness http://r.reuters.com/guj58p

For Breakingviews click on [ID:nLDE69D0OS]

For a FACTBOX see [ID:nLDE69A1OP]

For a FACBOX on top IPOs [ID:nLDE69D1L9]


Enel, Europe’s most indebted utility, hopes to raise at
least 3 billion euros by selling shares in its EGP unit to help
cut debt and protect credit ratings, even as the appetite for
green energy dims in the face of falling governments

In a newspaper interview on Thursday, Conti said EGP will
be valued in line with peers at around 10 to 12 times core
earnings. This would imply a valuation of up to 12.6 billion
euros, taking out debt of 3 billion euros and based on 2009 pro
forma core earnings of 1.3 billion euros.

“It could be attractive, but only at the right price. Peers
are trading on an average EV/EBITDA of 9.8 times 2011 core
earnings. I come out at 20 percent below that. Unless it’s
cheap, I think it will meet with a reasonably lukewarm
response,” Impax investment manager Simon Gottelier said.

Conti, the man behind the internationalisation of Enel,
which controls 92 percent of Spanish utility Endesa SA
(ELE.MC: ), once said he expected to raise 4 billion euros from
the sale, but has since said he wants at least 3 billion


The shares of EGP’s main rivals — Spain’s Iberdrola
Renovables SA (IBR.MC: ), Portugal’s EDP Renewables (EDPR.LS: ) and
France’s EDF Energies Nouvelles SA (EEN.PA: ) — have
underperformed in the past 12 months, hit by cuts to green
energy incentives in Europe and uncertainty over the U.S.
climate change bill.

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 also less than its peers.

“What we like is it is very cash flow generative, can fund
capex internally and has a low net debt-to-EBITDA ratio versus
peers,” Gottelier said.

On Thursday, Conti confirmed the unit will offer a dividend
payout of around 30 percent, in line with peers.

The trouble is hydro, which excludes more profitable big
hydro projects, and geothermal are mature and relatively low
growth businesses, and with most of its future growth based on
wind development, regulatory uncertainty beyond 2011 is a

“Regulatory changes are a big problem when countries are
worried about their budgets and at this stage the sector can
only grow through subsidies,” said Benita Barretto, an analyst
at Berenberg, adding investors were unwilling to overpay.

The IPO’s global coordinators are Mediobanca (MDBI.MI: ),
Goldman Sachs Group Inc (GS.N: ), Credit Suisse Group Inc
(CSGN.VX: ) and Intesa Sanpaolo SpA (ISP.MI: ). Bookrunners are JP
Morgan Chase and Co (JPM.N: ), Bank of America Corp (BAC.N: ),
Morgan Stanley (MS.N: ) (Read more about the money market today. ), Barclays Plc (BARC.L: ), BBVA (BBVA.MC: )
and UniCredit SpA (CRDI.MI: ).

A source told Reuters on Thursday that banking commissions
for the IPO would be around 1.85 percent of the final offer.
(Reporting by Stephen Jewkes and Alberto Sisto; additional
reporting by Lisa Jucca, Ian Simpson in Milan and Christopher
Vellacott in London; editing by Andre Grenon)

UPDATE 4-Enel cuts unit’s IPO range — sources