(ADPnews) - Nov 5, 2010 - Enel Green Power (BIT:ENZ) made a less than impressive bourse debut, raising just EUR 2.6 billion (USD 3.7bn) of the initially targeted EUR 3.4 billion.
In its debut on the market on Thursday the renewables unit of power giant Enel SpA (BIT:ENEL) showed hesitant performance, plunging as much as 4.4% to EUR 1.53 in the morning and then recovering to close at parity at EUR 1.60. The stock continues to lose ground in its second day on the Milan stock market, dipping nearly 2% after noon today, to around EUR 1.57.
The renewables company set the price of its initial public offering (IPO) at EUR 1.60 per share, after cutting twice the bottom of the preliminarily projected EUR 1.90 to EUR 2.40 range.
According to an Enel breakdown of the final allocation, retail investors took 1.263 billion shares, some 77% of the 1.625 billion shares available, while institutions accounted for just 23% of the uptake with 361.6 million shares.
The green unit's market capitalisation, based on a EUR-1.60 per-share offer price, comes in at EUR 8 billion. That ranks Enel Green Power 13th in the Milan Stock Exchange's revised FTSE MIB blue-chip index.
Enel tried to stir Europe's market for initial public offerings back to life at a time when the attractiveness of the renewables sector has diminished as governments started scaling back incentives and returns in the sector's major stocks continue to disappoint.
In addition, investors were deterred by concerns that the IPO proceeds would be used by Enel to reduce its massive debt, amounting to EUR 53.89 billion as of the end of June.
Enel chief executive Fulvio Conti confirmed at a news conference in Milan on Thursday that Enel's net debt will be narrowed to EUR 45 billion at the end of 2010, helped not only by the IPO proceeds but by divestment of non-core assets such as a 66% stake in Enel Maritza East 3, a coal-fired power plant in Bulgaria.
Conti had previously said that Enel Green Power had a "production mix among the most efficient in the sector" and depended on government subsidies for less than 30% of its revenues.
"The opening hasn't gone badly. There is enough liquidity to cover these early sales. This stock has the potential to grow," the chief executive remained upbeat even after the sluggish bourse debut.
(EUR 1.0 = USD 1.397)
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