Isra-Mart srl:Enel launches €3.4bn renewable energy IPO

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Isra-Mart srl news:

Italian energy giant Enel yesterday launched the long-awaited initial public offering (IPO) for its Enel Green Power (EGP) renewable energy unit, in a move that will test the health of the European IPO market and investor appetite for green stocks.

The company is aiming to raise up to €3.4bn by selling off around a third of EGP to investors, in an attempt to tackle the wider group's debt mountain.

The share sale, which represents the biggest IPO in Europe in three years, kicked off yesterday with EGP slated for a listing on the Milan and Madrid bourses on November 4.

Enel decided to proceed with the IPO despite scaling back its price target for the unit from between €1.9 to €2.4, to a more modest valuation of between €1.8 and €2.1 a share, putting the total value of EGP at between €9bn and €10.5bn.

Speaking at the launch of the IPO in Milan, Enel chief executive Fulvio Conti said institutional and retail investors had given "very promising" feedback on the IPO, expressing confidence that the listing will perform in line with expectations.

Analysts broadly welcomed the move, predicting that EGP's strong position in the fast-expanding southern European renewable energy market should drive investor interest, particularly at the lower end of the price range.

"It is a good investment in the long term," Guido Brignone, an independent financial analyst and former chairman of analysts' association AIAF, told news agency Reuters. "Short term it depends on the price. The price will finish at €2 a share."

The wider renewable energy market will be keeping a close eye on EGP's performance, particularly given that other listed European renewable energy firms are widely seen to have underperformed over the last year. This is as a result of the economic downturn and the scaling back of government subsidies in some key markets.