Acciona Plans Real Estate IPO as It Focuses on Renewables

Updated on
  • Firm will probably keep minority stake in property arm
  • Renewables investment growing amid emissions-cutting targets

Spanish construction, power and industrial group Acciona SA is preparing a potential initial public offering of its real-estate unit for next year as it increases its focus on renewable energy amid surging demand for green power.

“It would be a Spanish IPO, most likely, because it would be focusing on Spanish real estate,” chairman Jose Manuel Entrecanales said in an interview on the sidelines of the Paris climate summit on Monday. Real estate is “not super core” to Acciona’s focus on solar and wind power, and the company would probably retain only a minority stake after a flotation, he said, adding that a direct sale of a stake to a strategic investor is also a possibility.

Acciona is moving away from real estate as investment rises rapidly in renewable energy, encouraged by carbon-reduction targets that governments are discussing in Paris this week. Its energy revenues climbed 37 percent in the first nine months of the year, to about 2.1 billion euros ($2.3 billion), and represent its second-largest business line after infrastructure.

The real estate unit, called Acciona Inmobiliaria, was valued at 1.02 billion euros as of Dec. 2014, according to an auditors’ report carried out by Deloitte. It owns commercial and residential assets including rental housing, offices, shopping malls and student accommodation.

While “the flow of capital is here to stay” into renewables, “there may be some elements that change the dynamics” such as a rise in interest rates that could increase the cost of funding, Entrecanales said.

He spoke as negotiators from almost 200 countries gathered in Paris under the auspices of the United Nations, with a deadline for a new global deal on reducing carbon emissions looming at the end of this week. They’ve been joined by a larger-than-ever contingent of business leaders, many of whom say they’re seeing the potential for profit in transforming the global economy to emit less greenhouse gases.

In a push to raise capital for expansion, Acciona in October announced the sale of its wind turbine-manufacturing business to Nordex SE for 785 million euros. It’s targeting more growth from solar, the costs of which are still rapidly declining, energy unit head Rafael Mateo said that month.

The company is also considering expanding its relationship KKR, the private-equity firm that in 2014 acquired a one-third stake in its energy assets outside of Spain for 417 million euros, he said at the time.

The Spanish renewables industry has been rocked in recent weeks by the woes of solar-energy firm Abengoa SA, which is trying to avoid insolvency. Abengoa’s troubles are “a disaster” that’s impacting the credibility of the broader Spanish industry, Entrecanales said. “From every point of view, I am very worried.”

Representatives for Abengoa didn’t immediately return a call and e-mail seeking comment.

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