September 25, 2021
Acciona Energía An IPO That Does Not Require A Discount

Acciona Energía An IPO That Does Not Require A Discount

Acciona Energía is going to open its books to a market eager for clean energy companies .

It is expected that the National Securities Market Commission (CNMV) will give the green light to the company’s prospectus for its IPO next week and from there they will start counting 15 days until its premiere on the parquet, which will take place between the penultimate and the last week of the month of June. At that time, it will become the largest IPO since Aena in 2015.

In the absence of knowing the details that will be included in that brochure, Acciona Energía would start with a valuation of close to 10.3 billion euros if the multipliers at which its peers in the sector are listed are taken as a reference.

This is the case of the Danish Orsted, the Portuguese EDP Renovaveis and the French Neoen, all specialized in green energies and trading at a PER (number of times the price collects the company’s profit) of 16.5 times .

Acciona, the parent company, will maintain control of its subsidiary once it becomes listed with between 70% and 75% of the capital. From Renta 4, they believe that it will finally be a placement for a quarter of Energy only among institutional entities and give a valuation for it that ranges from 9,800 to 10,500 million euros, which already “includes a discount of between 15% and 20% with respect to the 12,000 million average valuation “, point out its analysts.

Its IPO will be the largest in six years and will serve to measure the investment appetite for ‘green energy’
The placement, a priori, will not find problems. It does not matter the fall of solar companies in 2021 or the so-called renewable bubble that he has been talking about for months. Acciona will be the one who really takes the pulse of the market in terms of investors’ appetite.

He brings an experience in this field that would leave out any type of doubt about his business plan for the next five years. Present in 16 markets, Acciona Energía has a 30-year history behind it in the world of renewables, with 16 years of experience in Australia, almost 15 in the US and another 13 in Latin America. According to sources close to the firm, this expertise is what would not justify a discount in its valuation, but it would be more reasonable for it to be fair value.

Main figures
Acciona Energía represented 74% of the ebitda of the entire Acciona group in 2020. Its gross result reached 831 million euros and its debt, 3,444 million, although the renewable subsidiary has already presented a proforma by which it reduces its debt to 1,777 million euros, below market expectations.

Business plan
Acciona’s renewables division had, at the end of 2020, an installed capacity of 10,694 megawatts and seeks to double its installed renewable energy capacity in just 5 years, which means going from the current 10.7 GW to 20 GW by 2025 -with a growth of 4.8 in photovoltaics and 4.5 GW in wind- and will triple the initial figure by 2030.

Part of the guarantee of success of this guidance are the contracts that it already has closed for the sale of energy with large customers to reduce its carbon footprint. Specifically, 4.77GW, a quarter of the total. In 2020, Acciona Energía was the fourth largest firm worldwide in terms of PPAs signed contracts.

It is an ambitious plan with an investment of about 7,800 million euros that the company hopes to guarantee with the money it raises in the IPO and that would rule out subsequent capital increases to reach 2025, having met objectives. closed a syndicated loan worth 2.5 billion euros in recent weeks.

Reduce the cost of debt
One of the main objectives of the operation is to reduce the cost of financing . If compared with the average cost of Acciona’s debt at the end of 2020, its subsidiary could reduce the cost of financing by 180 basis points once it goes on the market, thanks to the investment grade rating (of the highest quality) that it will have.

According to the latest results of Acciona, its average cost of financing was 2.8% last year, below the 3.25% of 2019, between the 1.97% to which it financed its corporate debt and 7.42% of project-related debt. This distinction will not be made by Energía, which will link all its debt to the parent company.

Its financing will be cheaper than the parent company and will double the installed capacity to 20 GW in 2025
It is, in any case, a cost lower than 3.18% for Iberdrola or 2.80% for Naturgy and that the Energy subsidiary aims to lower it to 1%, always considering that interest rates remain at current levels.

The company expects by 2021 that the net debt / ebitda ratio of the subsidiary will be between 2.1 / 2.3 times , compared to the average leverage of 4 times that the FactSet consensus estimates for direct comparables such as the French Neoen , 8 times and 4 times from Iberdrola and Acciona itself or 2.6 times from Enel.

This financial slack will allow Acciona Energía to maintain, as its parent company, a stable dividend policy . The company expects to distribute a maximum of 50% of its profit among shareholders , although it has not yet clarified whether it will do so with a charge to 2021.

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