Renovables debut spoiled by party-pooping bourse
Iberdrola renewables division closes below IPO price.
14 December 2007
MADRID – Renewed credit crunch fears hit stock markets across the globe yesterday, scuppering hopes of a successful bourse debut for Spanish utility Iberdrola's renewable energy division Renovables.
In what was Spain's largest ever initial public share offer, Iberdrola set the price for the Renovable issue at EUR 5.30 per share, at the low end of the indicative range it gave. The stock, however, closed down 2.83 percent at EUR 5.15 after a high of EUR 5.29 and a low of EUR 4.97.
By contrast the Spanish blue-chip Ibex 35 index shed 2.27 percent in what was a very bad day for international stock markets in general.
Tokyo set the ball rolling with a loss of 2.48 percent and the European bourse followed suit. Liquidity jitters and their impact on the real economy also had Wall Street in their grip at mid-session.
After the positive reaction in the markets to the US Federal Reserve and the European Central Bank announcement Wednesday of joint action to ease the lack of liquidity, investors took a U-turn yesterday.
The central bank action in itself seemed to heighten fears about the extent of the credit crunch, with the help extended to the markets little more than a form of charity hiding a multitude of possible ills.
On top of that, the ECB in its monthly economic bulletin for December echoed feelings now prevalent in the investment community.
"The reappraisal of risks in financial markets is still evolving and is accompanied by continued uncertainty about the potential impact on the real economy," the report said.
Despite what must have been an unexpected setback, Iberdrola Chairman Ignacio Sánchez-Galán was ironic and upbeat. "It's not exactly the best day [for a listing]," he said, but still described the IPO as a "success."
The EUR 4.5 billion Iberdrola raised from the share sale will help fund further investment to strengthen Renovables' position as the world's biggest producer of wind power. Iberdrola plans to invest EUR 9 billion through to 2010 to almost double its generation capacity using renewable resources to 13,600 megawatts.
Sánchez-Galán said within a context of sharp increases in demand for power, ever dwindling fossil fuels, and the need to cut emissions, Iberdrola's long-term focus on renewal energy has been a good move.
[Copyright EL PAÍS, SL./ A. SIM 2007]
Subject: Spanish news