Italy's Enel Evaluating Plan to Repurchase Stake in Enel Green

  • Deal for 30 percent stake may be valued at 3 billion euros
  • Enel Green Power's initial public offering was in 2010

Italy’s biggest utility is evaluating a plan to acquire the 30 percent it doesn’t already own of its renewable energy unit, a deal that may be worth as much as 3 billion euros ($3.3 billion).

Enel SpA sold the stake in Enel Green Power SpA in an initial public offering in 2010, and the companies are now considering a “corporate integration,” the Rome-based utility said Tuesday in a statement. The news was first reported by the Spanish news site El Confidencial.

The deal would be the second time in a week that a company reacquired a minority stake in a clean energy unit. Terra Firma Capital Partners announced Oct. 22 a deal to buy back the shares it didn’t own of U.K. renewables firm Infinis Energy Plc for 555 million pounds ($848 million), two years after listing it.

“About 30 percent of Enel Green Power’s market cap is 3 billion euros,” Jutta Unmuessig, an analyst at Barclays Plc, estimated the value of a buy-back in a phone interview Tuesday. “This announcement comes as a bit of a surprise, as Enel has said that it was going to be making the organization leaner via disposals.”

Growth Engine

The renewables developer is considered to be the growth engine of the company, according to an Enel spokesman. As clean energy technologies mature and become more mainstream, it makes sense for the utility to bring Enel Green Power into the center of the group. The renewables operation will receive half of Enel’s growth capital expenditure.

Reintegrating the clean-energy unit would help Enel diversify the parent company’s revenue, Janis Hoberg, an analyst with Bloomberg New Energy Finance in London, said in an e-mail.

"Enel Green Power has strong interest in Latin and South America and its recent success in the auctions in South Africa indicate the company’s competitiveness in emerging markets,” he said. “Contrarily, Enel’s portfolio is heavily weighted toward Europe, which suffers from flat demand, weak power prices and little growth opportunity.”

Enel Green Power rose 4.1 percent to 1.95 euros at the close in Milan, the highest in almost a year, giving it a market value of 9.7 billion euros.

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