Enel SpA (ENEL) has hired JPMorgan Chase & Co. (JPM) and Credit Suisse Group AG (CSGN) to help it sell as much as 22 percent of its Spanish unit Endesa SA (ELE), according to two people with knowledge of the matter.
Enel, Italy’s largest utility, will sell down its stake in Madrid-based Endesa to as low as 70 percent as part of its plans to reduce debt, the people said, asking not to be identified because the plans are private. Enel holds a 92 percent stake in the company, which has a market value of 30.5 billion euros ($40.8 billion).
Mediobanca SpA (MB) will also advise on the transaction, which will probably be carried out in the fourth quarter of this year, the people said.
Endesa shares fell as much as 5.3 percent in Madrid trading and were 3.5 percent lower at 27.79 euros at 10:47 a.m. Enel fell 0.5 percent to 4.24 euros in Milan.
Enel Chief Executive Officer Francesco Starace said in a conference call with analysts on July 31 that selling more shares in Endesa is an option under consideration, adding that no decision has been made. The CEO’s comments were later confirmed by a spokeswoman at Enel.
Representatives for JPMorgan and Credit Suisse declined to comment. A spokesman for Mediobanca wasn’t immediately available when contacted by Bloomberg News. Representatives for both Enel and Endesa also declined to comment.
Enel, based in Rome, said on July 31 its first-half profit fell, hurt by weak demand for electricity in Italy and Spain and unfavorable exchange rates, especially in Latin America. Adjusted net income declined 4.8 percent to 1.57 billion euros. That beat the 1.49 billion euro average estimate of six analysts in a Bloomberg survey.
The company also announced a reorganization of its divisions and said it would tighten control of Santiago-based power group Enersis through the purchase of the 60.6 percent owned by Endesa. An extraordinary cash dividend, at least equal to revenue from the sale, will be proposed to Endesa shareholders, the company said.
Enel, which raised 1.3 billion euros with the sale of its stake in SeverEnergia to OAO Rosneft in 2013, is seeking to strengthen its balance sheet with another 4.4 billion euros from the sale of it power assets in Slovakia and Romania. The company owns 66 percent of Slovakia’s largest utility, Slovenske Elektrarne AS and power distribution assets in Romania.
Net debt rose 8.5 percent to 43.1 billion euros as of June 30 from 39.7 billion euros at the end of December.
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