Germany's RWE to spin off renewables, grids & retail businesses

German energy group RWE AG (ETR:RWE) said today it plans to spin off its renewables, grids and retail operations into a new company, which would seek a listing on the stock market in late 2016.

The new entity will have a renewable energy division with a portfolio surpassing 3.5 GW and a solid focus on wind power. The entire business, including grids and retail, is estimated to achieve external revenue of more than EUR 40 billion (USD 42.4bn) and earnings, before interest, tax, depreciation and amortisation (EBITDA) of over EUR 4 billion for 2015, based on pro-forma figures. It would employ two-thirds of the group’s 60,000-strong headcount.

“The new subsidiary will have its own access to the capital market and improve our growth prospects,” said CEO Peter Terium, adding that RWE views conventional power as “an irreplaceable partner” for renewables. RWE AG will concentrate precisely on conventional power generation and trading.

The spin-off is expected to be completed in the course of 2016, after which the new firm will start work on its initial public offering (IPO), involving the sale of a 10% stake to the public. The proceeds from it will be used to finance growth, mainly in the fields of renewables, decentralisation and digitisation. RWE will continue to be the majority owner of the new company after the IPO.

Exactly a year ago, RWE’s local rival E.on SE (ETR:EOAN) announced a move to spin off its conventional upstream and midstream activities in a bid to focus on renewables, distribution networks and customer solutions.

(EUR 1.0 = USD 1.060)

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