RWE Plans Private Placements of Innogy as It Readies IPO

  • Innogy grid, retail unit plans 10 percent capital increase
  • RWE commits itself to secondary offer on “great” interest

RWE AG plans parallel private placements of shares on top of the public listing of the German utility’s new renewables, grid and retail business Innogy SE.

RWE is planning to float a 10 percent stake and will also hold a secondary share offering at the same time, the Essen-based company said Monday in a statement. Additional private placements with investors outside Germany and Luxembourg, whose proceeds will benefit Germany’s biggest power producer, are being planned.

“There’s great interest from investors,” Chief Executive Officer Peter Terium said Monday in a phone interview, adding that the exact number of shares to be sold from RWE’s holdings is yet to be determined. “That’s the reason why RWE has committed itself definitively to a secondary offer.”

RWE, Germany’s second-biggest utility, split its renewable-energy, grid and retail businesses into Innogy in April, with the aim of selling shares in the new unit by year-end. RWE joined competitor EON SE in separating its conventional plants from its green-energy business in response to Germany’s shift toward wind and solar generation that has hurt conventional power plant profitability and pushed down wholesale energy prices.

RWE is planning to raise about 2 billion euros ($2.2 billion) in the initial public offering, people familiar with the matter said last week. Innogy will pay investors a dividend of 70 to 80 percent of adjusted net income.

“Long-term investors such as pension funds, infrastructure funds or yield funds” are especially looking at Innogy as it isn’t limiting itself to short-term profit and seeks sustainable growth with an “attractive dividend policy,” Terium said.

RWE fell 1.7 percent to 14.645 euros in Frankfurt, its lowest closing price since Sept. 1.

EON listed its conventional power-generation business Uniper SE on Monday in Frankfurt.

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