RWE Spin-off Valued at Up to 20 Billion Euro

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--European power companies continue to refocus their fortunes on renewable energy as German energy giant RWE AG (FWB:RWE) (Essen, Germany) announced this week that shares in its spin-off business innogy will be up for grabs next month.

The company confirmed that it plans to release the initial public offering (IPO) for 10% of innogy on October 7. More than 55 million new shares will go on sale with share prices estimated between 32 and 36 euro ($36 and $40), which would value the company at up 20 billion euro ($22.4 billion). It is Europe's largest IPO since the listing of Glencore plc (Baar, Switzerland) in 2011. innogy will house RWE's renewable energy, electricity grids and retail operations. The loss-making conventional power business will continue to operate under the RWE banner.

RWE, like other European power companies, is suffering from low electricity prices in addition to shouldering huge costs associated with the German government's decision to shut down all of its nuclear power plants in the coming years. Last month, Germany's largest utility E.ON SE (FWB:EOAN) (Düsseldorf) listed for its new power business, Uniper, which would house its loss-making conventional power generation, energy storage and global commodities business units. This leaves E.ON free to focus on the profitable areas of renewable energy and distribution grids. The company, which was created at the start of the year, was listed a fortnight ago, getting a valuation of 3.9 billion euro ($4.4 billion). This is considerably less than E.ON's 12 billion euro ($13.5 billion) book value for Uniper. For additional information, see September 5, 2016, article--E.ON to List Power Spin-off 'Uniper' on September 12.

At the launch, E.ON Chief Executive Officer Johannes Teyssen said: "E.ON and Uniper now have every opportunity to be successful with their clear focus on their respective segments of the energy industry. They can now develop without compromises and serve the needs of their respective customers."

RWE first announced innogy's creation back in April. For additional information, see April 5, 2016, article - RWE Launches New Renewable Energy Business.

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