UPDATE 2-RWE's Innogy hits top valuation in IPO

* Innogy shares priced at 36 eur/shr

* To start trading Friday, Oct. 7

* Innogy’s market cap at 20 bln eur (Adds final pricing)

FRANKFURT, Oct 6 (Reuters) - Innogy, consisting of the healthy business parts of struggling utility RWE, hit the top of the price range in its initial public offering (IPO), showing high demand for the stable and regulated returns the group offers.

Investors are keen on Innogy’s regulated network business -- accounting for the majority of its profits -- as it provides certainty over earnings years into the future at a time when traditional utilities are seeing their business fall apart.

Shares in Innogy, which will start trading on Friday in what is Germany’s largest IPO since 2000, were sold at 36 euros ($40.26) apiece, the group said late on Thursday, the upper end of a narrowed price range of 35-36 euros.

The price values the 138.9 million shares on offer at 5 billion euros, giving Innogy, which comprises RWE’s network, retail and renewable units, a market valuation of 20 billion euros, more than twice RWE’s current market capitalisation.

Goldman Sachs and Deutsche Bank served as global coordinators of the IPO, the largest in Germany since Deutsche Post went public in 2000, and took in 35 million euros in fees as part of the placement.

Shares in RWE, which still holds 75 percent of Innogy, closed 1.7 percent lower on Thursday and were among the biggest decliners Germany’s blue-chip index.

$1 = 0.8941 euros Additional reporting by Arno Schuetze, Alexander Hübner and Tom Kaeckenhoff; Editing by Maria Sheahan