Enel targets top payout for green unit in IPO-UPDATE 2

Trade the News

Saturday September 11, 2010 06:09:11 AM GMT

* Dividend to be in top range of peers - sources

* Leading peers payout in 20-30 percent range

* Hopes to list unit by end-October - sources

* Enel shares up 0.4 percent at 3.95 euros, index up 0.2 pct

(Adds detail, background, shares)

By Stephen Jewkes

MILAN, Sept 9 (Reuters) - Enel Green Power (EGP), the renewables unit of Italian utility Enel, intends to offer a top dividend, sources said on Thursday, in a bid to draw investors for what could be Europe's biggest listing this year.

Enel, Europe's most-indebted utility, aims to raise at least 3 billion euros ($3.8 billion) from the sale of a minority stake in EGP to cut debt.

EGP, founded in December 2008, has an installed capacity of 5,761 megawatts, and operates more than 600 plants in 16 countries, producing electricity from water, sun, wind, geothermal sources and biomass energy sources.

It is one of Enel's fastest-growing businesses but its expansion is slower than at some of its peers, such as Spanish group Iberdrola Renovables SA. Investors are keen to know what dividend policy the company will offer.

"The payout will be in the top range of its peers," one source close to the deal said.

Enel declined to comment. The company outlined its strategy for EGP on Wednesday in a meeting with analysts from the consortium handling the initial public offering (IPO).

An analyst said the payout was "certainly attractive for potential investors, and, of course, Enel," which could keep around 70 percent of the unit.

"At the end of the day, however, it will be the IPO pricing that is the key," said the analyst, who spoke on condition of anonymity.

GREEN RIVALS

Besides Iberdrola Renovables, EGP's main listed rivals are Portugal's EDP Renewables and France's EDF Energies Nouvelles.

IBR has a dividend payout of 27 percent of net profit and EDF Energies' is around 30 percent. EDP Renewables plans to pay a first dividend next year on 2010 results with a minimum payout of 20 percent.

Another source said: "Enel hopes to list the unit on the stock market the end of October."

Enel told Reuters in August it would launch the IPO for EGP, one of its fastest-growing units, in the last two weeks of October. However, it could still opt for a private sale if that offers a better deal. In a statement on Wednesday, Enel said Chief Financial Officer Luigi Ferraris has been appointed chairman of EGP. Francesco Starace will stay on as chief executive.

By 1051 GMT, Enel shares were up 0.4 percent at 3.95 euros. The STOXX Europe 600 Utility index was up 0.2 percent. (Reporting by Stephen Jewkes; Editing by Sharon Lindores) ($1=.7871 Euro)

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