Enel ready to dive in with €3.1bn reintegration

Wind Watch

“Why do you need a phone to carry around? You’ve got a landline.”

When we are young we spend ages enthusing to our elders about the latest gadgets. Then we grow up and become the ones having gadgets enthused about to us. The challenge for parents is to work out which of these gadgets are useful, and which are shiny fads.

And it isn’t always easy. I’m sure the sentiment in the opening line will be familiar to many.

There is a parallel here with energy companies. Most established utilities are well aware of the types of renewables out there, but they want to take time before they take the plunge. It is often left to their subsidiaries to take the risks and make the business case.

And that, in a roundabout way, brings us to Italian utility Enel.

This Monday, Enel Green Power's shareholders voted to back the €3.1bn reintegration of the subsidiary into the parent firm. Enel wants to give renewables a prominent role in its future growth.

Indeed, in our interview with Enel Green Power chief executive Francesco Venturini in our Finance 2016 report on Tuesday, he said that he saw the deal as a reverse takeover rather than a merger, acquisition or reintegration. He said that Enel was looking to grow spending on renewables as well as seeking to copy the entrepreneurial spirit in Enel Green Power.

You can read the full interview in our Finance 2016 report now.

It would be easy to dismiss Venturini here. We expect smaller parties in a deal like this to talk themselves up. It is only natural when they have to justify their decisions to shareholders.

But, in this case, there is a lot to support what he is saying.

First, we know Enel chief executive Francesco Starace likes wind and other renewables. He was central to the establishment of Enel Green Power, and was green energy a starring role. Enel is looking for renewables to account for 50% of new growth capex by 2019.

And second, Enel Green Power has proved its strategy of investing in emerging markets. Enel set up the subsidiary in 2008; sold 30% of it for around €2.3bn in 2010; and watched it grow a portfolio of 738 schemes totalling 10.4GW in 17 countries. It makes sense to give Enel Green Power a key role now its model is established.

It also looks like a good deal for the subsidiary’s shareholders, who are due to swap each of their shares for 0.486 of a share in the parent group. The deal is due to close in March.

Enel has played a smart game here. Like a sceptical parent, it did not splurge like crazy when it first heard about renewables. Rather, it waited to see that green energy was not a fad and that it made business sense. Now it is ready to dive in.

Wind Watch

“Why do you need a phone to carry around? You’ve got a landline.”

When we are young we spend ages enthusing to our elders about the latest gadgets. Then we grow up and become the ones having gadgets enthused about to us. The challenge for parents is to work out which of these gadgets are useful, and which are shiny fads.

And it isn’t always easy. I’m sure the sentiment in the opening line will be familiar to many.

There is a parallel here with energy companies. Most established utilities are well aware of the types of renewables out there, but they want to take time before they take the plunge. It is often left to their subsidiaries to take the risks and make the business case.

And that, in a roundabout way, brings us to Italian utility Enel.

This Monday, Enel Green Power's shareholders voted to back the €3.1bn reintegration of the subsidiary into the parent firm. Enel wants to give renewables a prominent role in its future growth.

Indeed, in our interview with Enel Green Power chief executive Francesco Venturini in our Finance 2016 report on Tuesday, he said that he saw the deal as a reverse takeover rather than a merger, acquisition or reintegration. He said that Enel was looking to grow spending on renewables as well as seeking to copy the entrepreneurial spirit in Enel Green Power.

You can read the full interview in our Finance 2016 report now.

It would be easy to dismiss Venturini here. We expect smaller parties in a deal like this to talk themselves up. It is only natural when they have to justify their decisions to shareholders.

But, in this case, there is a lot to support what he is saying.

First, we know Enel chief executive Francesco Starace likes wind and other renewables. He was central to the establishment of Enel Green Power, and was green energy a starring role. Enel is looking for renewables to account for 50% of new growth capex by 2019.

And second, Enel Green Power has proved its strategy of investing in emerging markets. Enel set up the subsidiary in 2008; sold 30% of it for around €2.3bn in 2010; and watched it grow a portfolio of 738 schemes totalling 10.4GW in 17 countries. It makes sense to give Enel Green Power a key role now its model is established.

It also looks like a good deal for the subsidiary’s shareholders, who are due to swap each of their shares for 0.486 of a share in the parent group. The deal is due to close in March.

Enel has played a smart game here. Like a sceptical parent, it did not splurge like crazy when it first heard about renewables. Rather, it waited to see that green energy was not a fad and that it made business sense. Now it is ready to dive in.

Wind Watch

“Why do you need a phone to carry around? You’ve got a landline.”

When we are young we spend ages enthusing to our elders about the latest gadgets. Then we grow up and become the ones having gadgets enthused about to us. The challenge for parents is to work out which of these gadgets are useful, and which are shiny fads.

And it isn’t always easy. I’m sure the sentiment in the opening line will be familiar to many.

There is a parallel here with energy companies. Most established utilities are well aware of the types of renewables out there, but they want to take time before they take the plunge. It is often left to their subsidiaries to take the risks and make the business case.

And that, in a roundabout way, brings us to Italian utility Enel.

This Monday, Enel Green Power's shareholders voted to back the €3.1bn reintegration of the subsidiary into the parent firm. Enel wants to give renewables a prominent role in its future growth.

Indeed, in our interview with Enel Green Power chief executive Francesco Venturini in our Finance 2016 report on Tuesday, he said that he saw the deal as a reverse takeover rather than a merger, acquisition or reintegration. He said that Enel was looking to grow spending on renewables as well as seeking to copy the entrepreneurial spirit in Enel Green Power.

You can read the full interview in our Finance 2016 report now.

It would be easy to dismiss Venturini here. We expect smaller parties in a deal like this to talk themselves up. It is only natural when they have to justify their decisions to shareholders.

But, in this case, there is a lot to support what he is saying.

First, we know Enel chief executive Francesco Starace likes wind and other renewables. He was central to the establishment of Enel Green Power, and was green energy a starring role. Enel is looking for renewables to account for 50% of new growth capex by 2019.

And second, Enel Green Power has proved its strategy of investing in emerging markets. Enel set up the subsidiary in 2008; sold 30% of it for around €2.3bn in 2010; and watched it grow a portfolio of 738 schemes totalling 10.4GW in 17 countries. It makes sense to give Enel Green Power a key role now its model is established.

It also looks like a good deal for the subsidiary’s shareholders, who are due to swap each of their shares for 0.486 of a share in the parent group. The deal is due to close in March.

Enel has played a smart game here. Like a sceptical parent, it did not splurge like crazy when it first heard about renewables. Rather, it waited to see that green energy was not a fad and that it made business sense. Now it is ready to dive in.