Enel may delist Enel Green Power to bolster growth


Enel, the Italian utility firm, will decide next month whether to fold Enel Green Power (EGP) into the group as part of its ‘corporate integration’ strategy designed to ring-fence its most profitable subsidiary.

EGP is the clean power arm of the group, and one of its most cash-generative businesses thanks to the rise in renewable energy deployment in recent years. Should Enel seek to regain further control of the business – it currently owns 69% – it could see EGP delisted as a company as Enel looks to harness its potential.

Valued by Thomson Reuters at $10 billion, EGP is a profitable source of income, and one which CEO of the state-controlled utility, Francesco Starace, believes could deliver much-needed dividends to Enel over the next five years.

Enel has been exposed to narrow margins caused by weak demand and low power prices in more traditional power markets, but green energy – and thus, EGP – has been relatively robust over that same period. Advisors from Enel have already been appointed to explore the option of folding EGP into the business, and Starace did confirm that there is unlikely to be any kind of tender or exchange offer on EGP shares.

Reuters has revealed that discussions on the deal, despite being at an early stage, are firmly "on the table", with one source saying that the "logical upshot" points towards Enel taking full control of a delisted EGP.

Enel set up EGP in 2008. The green energy company then capitalized on Italy’s solar PV boom, was listed in 2010 and become one of the world’s largest clean energy firms.

In contrast, Enel remains heavily indebted, but does boast a strong core of profitable assets that could allow it to shift its focus into growth areas, such as green energy and smart grids. Analysts expect around 50% of Enel’s growth investments to be steered into renewable energy projects over the next few years – a sum that will be boosted significantly should EGP be folded into the business.