London, Warsaw IPOs fly while Enel cuts to sell
LONDON/MILAN (Reuters) - While investors flocked to Friday's IPOs of AZ Electronic and the Warsaw bourse, a dose of realism soured Enel's goal to raise 3 billion euros ($4.2 billion) from its green power unit.
On Thursday Italian utility Enel dropped the bottom of its price range for its initial public offering (IPO) of Enel Green Power (EGP) to 1.6 euros from 1.8 euros, its second price cut in two weeks, as it struggled to attract institutional investors wary of the underperforming green-energy sector.
"There are plenty of IPOs that seem to be working particularly well, and it is all to do with the willingness of the seller to be realistic," said a source close to the deal.
A sale at the bottom end of the price range would mean Enel, Europe's most indebted utility, would raise up to 2.6 billion euros from the listing, if the additional greenshoe option were exercised, short of the 3 billion euros it wants to cut borrowings and protect its credit rating.
"It will get done," the source said of the offer, which is set to be Europe's biggest in three years.
"The book has been making progress today. They (investors) looked on the range cut favorably."
In contrast, Poland lifted the upper end of the price range in its 1.2 billion zloty ($420 million) privatization of 64 percent of the Warsaw bourse to 46 zlotys from 43 zlotys after strong investor interest, and priced the offer at the top of the new range on Friday.
And the 383 million pound ($610 million) London listing of AZ Electronic Materials also drew strong demand, pricing at the bottom of a narrowed range of 240-250 pence per share, with its shares starting 8 percent higher.
AZ had raised the amount it planned to raise from $400 million after books were covered at the midpoint of its initial 200-280 pence price guidance with almost a week left.
Books on the EGP listing, which close later on Friday, were only 75 percent covered with three days to go.
They were more than fully covered by late Thursday, a source close to the matter told Reuters, but the size of the retail portion of the offer was expected to be increased to as much as 50 percent from an initial 15 percent due to lackluster institutional interest.
There has been a resurgence in European offerings as equity markets rebound, with many companies managing to get IPOs away.
Sales, including those of Internet betting exchange Betfair
and Norwegian oil company Statoil, have even been priced toward the upper end of their guidance ranges.
There has been particular interest in the London listings of Russian firms, with the order books for the offering of Facebook investor Mail.Ru Group oversubscribed with nearly two weeks until pricing, and retailer O'Key's books also oversubscribed with several days to go. But EGP, which generates electricity from sun, wind and other renewable sources at more than 600 plans in 16 countries, has struggled to win over investors disappointed with green energy stocks.
Shares in EGP's main listed rivals -- Spain's Iberdrola Renovables SA, Portugal's EDP Renewables and France's EDF Energies Nouvelles -- have underperformed in the past 12 months, hit by cuts to green energy incentives in Europe and uncertainty over the U.S. climate change bill.
(Reporting by Kylie MacLellan in London, Agnieszka Barteczko and Adrian Krawjewski in Warsaw, and Maria Pia Quaglia and Stephen Jewkes in Milan; Writing by Kylie MacLellan; Editing by Will Waterman)
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