RWE Innogy IPO Range Values Green Energy Unit at $22 Billion

  • Oct. 7 first day of trading in Frankfurt; offer from Sept. 26
  • Listing would be Europe’s biggest IPO since Glencore in 2011

RWE AG, Germany’s largest power producer, set the price range for an initial public offering of its Innogy SE unit, giving the green energy business a potential market value of as much as 20 billion euros ($22.4 billion).

Innogy, the renewables, retail and grid businesses of Essen-based RWE, expects to raise as much as 5 billion euros from an issue of new shares and a sale of existing stock by its parent, which would be Europe’s biggest IPO since Glencore Plc’s listing in 2011. Innogy’s offering is planned for Oct. 7.

“There is a great deal of interest” from investors just two weeks ahead of Innogy’s IPO, Chief Executive Officer Peter Terium said on conference call with reporters Friday. As much as 75 percent of investor interest is from the U.S. and the U.K., Chief Financial Officer Bernhard Guenther said on the call.

Germany’s biggest utilities have been forced to take steps to mitigate the nation’s shift away from nuclear, coal and natural gas toward wind and solar generation, a policy that’s undermining power prices and hurting their profitability. RWE is focusing on nuclear, fossil-fuel generation and energy trading, while EON SE this month listed most of its Uniper unit and kept renewables, grids and household customers for itself.

RWE fell 0.6 percent to close at 15.005 euros in Frankfurt. The shares have gained 28 percent this year, the second-best performer in Germany’s benchmark DAX index.

Dry Market

BlackRock Inc. has submitted a binding purchase order for 940 million euros as part of the secondary offering on behalf of its clients. The number of Innogy shares it will buy depends on the issue price that’s to be set on the basis of a bookbuilding process. The offer period starts Sept. 26 and ends Oct. 6.

“BlackRock’s commitment is a sign not only for how attractive Innogy is considered, but also for how the market has dried up in this field,” said Thomas Deser, a fund manager at Union Investment, which holds RWE shares and is “intensively examining” the Innogy offer.

EON on Sept. 12 distributed 53 percent of Uniper to existing shareholders. It intends to sell the remaining stake in 2018 at the earliest.

RWE, which set the IPO price range at 32 to 36 euros a share, will hold at least 75 percent of Innogy after placing at least 10 percent and listing another 10 percent on the Frankfurt Stock Exchange. While it may sell more of the unit in the future after a six-month lock-up period, it plans to keep a majority stake. Long-term investors such as pension and infrastructure funds have expressed interest in the company, Terium has said.

The sale of as much as 25 percent reflects “strong demand for regulated assets in the ultra-low interest-rate environment,” said Elchin Mammadov, an analyst at Bloomberg Intelligence who had valued Innogy at as much as 26 billion euros.

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