RWE’s Innogy makes debut with biggest IPO in years

Innogy, the renewables subsidiary of German energy giant RWE, made its debut on the Frankfurt stock exchange on Friday with investors snapping up shares in Europe’s largest initial public offering in years.

Stock in the new company, which bundles RWE’s power grid, renewables and sales arms, along with 40,000 of its 60,000 workers, touched 37.30 euros shortly after trading opened before falling back.

Shares fell to slightly below the 36-euro ($40) starting price at 35.83 euros around 1330 GMT.

The flotation values Innogy at around 20 billion euros, instantly making it the most valuable German energy provider by market capitalisation.

It is the largest IPO in the European Union since 2011, and the largest in Germany since the 2000 flotations of Deutsche Post and microchip maker Infineon.

Only around a quarter of Innogy shares were offered on Friday, bringing in around 5.0 billion euros.

Innogy said in a statement that it would use its share of revenues from the sale for “investments in its core business areas”.

“We plan to capitalise on the tailwind of the IPO to further strengthen our position,” Innogy and RWE chief executive Peter Terium said.

RWE has followed in the footsteps of German competitor EON, which floated its own subsidiary Uniper, a bundle of all its fossil fuel operations, in mid-September.

The moves come as traditional energy firms in Germany are battling to adapt to a new environment of low wholesale electricity prices and competition from government-subsidised renewables.

“The successful flotation of Innogy indeed solves (RWE’s) tense financial situation, but with an aftertaste of in part disposing of the valuable ‘family silver’,” analysts at DZ bank wrote.

“The risks in the remaining activities of RWE shouldn’t be overlooked,” they went on, pointing to likely continuing low electricity prices that will weigh on generators for years to come and uncertainty over the costs of nuclear waste disposal.

RWE stock had fallen 6.57 percent to 13.51 euros by 1330 on Friday, making it the worst performer on the DAX index of leading German shares.

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