Enel Green Power SpA, the renewable energy unit of Italy’s biggest utility, rebounded on its first day of trading after Europe’s largest initial public offering since 2007.
Green Power closed unchanged in Milan trading at the offer price of 1.60 euros. Earlier, the shares fell as much as 4.4 percent to 1.53 cents before rebounding. The company sold 2.26 billion euros of shares in the IPO.
“A cool reception is not the correct term to define the debut,” Enel Chief Executive Officer Fulvio Conti told journalists during a press conference in Milan today. “Investors need to consider the important growth prospects.”
Parent Enel raised less than expected from the IPO after being forced to cut the minimum price offered to investors. The Rome-based company said demand was only 365 million shares higher than the 1.415 billion shares offered.
Conti said today the offering’s global coordinators will exercise a so-called greenshoe option of 210 million shares worth an additional 336 million euros.
Investors were cautious after losing money on share sales by Spain’s Iberdrola Renovables SA in December 2007 and Portugal’s EDP Renovaveis SA in June 2008. Iberdrola Renovables has dropped about 53 percent since its debut, while EDP has declined 47 percent since its first day of trading.
Conti had said he hoped to make at least 3 billion euros from the IPO to help cut Enel’s debt. The company tried to lure investors by offering a 30 percent dividend payout and highlighting a business mix that unlike competitors doesn’t largely depend on state subsidies due to a strong reliance on hydro power.
Enel will be able to meet its debt-reduction targets of 45 billion euros by year-end and 39 billion euros by 2014, despite making less than planned on the initial public offering, Conti said.
Cash to repay debt will come from asset sales which Conti says are on schedule. Enel is selling its Spanish gas- distribution assets and is in the process of selling a coal- fired power plant in Bulgaria.
“I think the market negativity toward the stock today is unjustified given the price was lowered to a level that now reflects fundamentals,” said Alessandro Frigerio, a fund manager at RMJ Sgr in Milan who bought shares in the IPO.
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