Ignitis Group Has Completed IPO: What It Is And Why It’s Called A Deal Of The Decade

An initial public offering is the beginning of the process of selling or initial distribution of a company’s stock to the public. Public offering shares allow a company to raise capital.

As a general rule, an IPO company must meet the requirements of a stock market supervisor. For example, in Lithuania, the Bank of Lithuania granted the IPO permit for Ignitis.

An IPO company also often hires financial professionals to help manage the process. Ignitis has chosen Swedbank as the stabilizer for the IPO, which would intervene in the stock if it started to move in the negative direction.

During the IPO, the company seeks to attract as much investor attention as possible to keep the price per share as high as possible. On Friday it became clear that the price of the Ignitis IPO had stabilized at 22.5 euros. 20 million will be spent. shares, for which 450 million were attracted to the company. euros.

Previously it was considered that the price of the Ignitis IPO could fluctuate up to 28 euros. However, the actual demand and the price of the shares will become apparent on the first day of trading. Global depository receipts representing shares denominated in euros will also be admitted to trading on the main list of the London Stock Exchange.

Want to invest

Ignitis explains that the IPO was organized in order to attract funds for investments in the distribution network, which is of strategic importance for Lithuania, and for the development of green energy production capacities in the region.

This exceptional event should also strengthen the Lithuanian capital market. It has already been discovered that 6,827 retail investors (of which 4,691 in Lithuania, 300 in Latvia and 1,836 in Estonia) participated in the IPO, with 1,869,301 shares (9.3% of 20 million shares).

Institutional investors (banks, funds, etc.) also attended the IPO with 18,130,699 (90.7%) shares.

Ignitis intends to invest the funds received in the construction of electrical networks, smart meters, digitization, green production, etc.

The main IPO document, called the Prospectus, states that after that, the Republic of Lithuania will remain the main shareholder of Ignitis Group. After the IPO, it was clear that the state has 73.1 percent left. Share. Consequently, Ignitis Group can now be valued at $ 1.671 billion. euros.

The Company’s dividend policy establishes that the initial dividend level for the year ended December 31, 2020 is 85 million euros. euros. Thereafter, the minimum annual growth of the dividend should reach 3%.

Ratings vary

Darius Maikštėnas, CEO of Ignitis Group, was pleased with the announcement circulated during the stock exchange that the IPO received great interest.

“We would like to thank the investors who have expressed their confidence in Ignitis Group at this important time. We are proud that our resilient growth strategy has been recognized by senior investors. The group is ready to play a leading role in the transition of the Baltic energy sector to renewable energy and to create long-term value for shareholders, ”he said.

Darius Daubaras, Chairman of the Ignitis Supervisory Board, commented that today the company is the leading energy company in Lithuania and the Baltic States, ready to promote energy change in the region.

“I am confident that with the work we have already done, an experienced management team and a solid strategy, we will ensure a stable and reliable return for our investors and contribute to a greener and cleaner future,” he said.

Finance Minister Vilius Šapoka noted that the Ignitis Group IPO has become the largest transaction in the Baltic countries in the last two decades.

“Meeting all the demand from local investors gives us hope that equity trading in the local market will become significantly more active. Investors have also shown confidence in the objectives of the Ignitis Group and the National Energy Independence Strategy: funds attracted will help implement them, promote green energy production and ensure energy security, “he said.

For his part, Dalius Misiūnas, rector of the ISM University of Management and Economics and former director of Lietuvos Energija, criticizes the IPO.

“In short, Ignitis’ IPO process sells monopoly benefits, which Lithuanian consumers bring through the tariff. This IPO is not necessary and is done without strategic valuation and at the wrong time, and the price benefits. to the buyers (institutional investors) and not to the seller (the state), ”he said in a comment to the media.

Economist Raimondas Kuodis has previously pointed out that energy companies in general should not seek profit (dividends for shareholders), but must take into account the public interest (energy prices as low as possible, etc.)

As you know, Ignitis Group is the largest group of energy companies in the Baltic States in terms of revenue. Its companies operate in Lithuania, Latvia, Estonia, Poland and Finland. The innovation fund managed by the group has invested in energy start-ups in the UK, Norway, France and Israel.

The main activities of the group’s companies are the production and supply of electricity and heat, the trade and distribution of electricity and natural gas, as well as the implementation of energy solutions. The group companies supply electricity and natural gas to around 1.6 million. commercial and private clients.

The group’s website states that Ignitis has recently focused on green energy development and aims to become the leading center of excellence for new energies in the region and a leader in distributed energy solutions both in the Baltic Sea and in other places.

“Currently, the Ignitis Group companies in Lithuania have three operating wind farms with a total capacity of 58 MW, and another 18 MW wind farm operates in Estonia. The group is also building a 94 MW wind farm in Pomerania, Poland. The Mažeikiai district is already preparing for the implementation of the wind farm project: the installation of roads and other preparatory work will begin. After about two and a half years, up to 15 wind farms with a total installed capacity of about 63 MW will generate green electricity at this wind farm.

The group owns the Elektrėnai complex with an electricity generation capacity of 1,055 MW. It also operates the Kruonis Accumulation Hydroelectric Plant, the only one in the region, with a capacity of 900 MW, and the Kaunas Algirdas Brazauskas Hydroelectric Plant with a capacity of 100.8 MW.

Currently, the group companies are building modern cogeneration power plants in Vilnius and Kaunas, which will convert unsuitable waste into energy. The thermal capacity of the Vilnius cogeneration plant will reach 229 MW and the electrical capacity 92 MW. The capacity of the Kaunas cogeneration plant will reach 70 MW and 24 MW, respectively.
The group is also investing in reducing greenhouse gas emissions. Ignitis grupė has distributed 600 million. green bonds in euros. The Group, having used the funds received from the green bonds to implement various projects in Lithuania, is expected to reduce its carbon dioxide emissions by at least 700 thousand annually. tons ”, is presented on the website.

Ignitis Group’s consolidated revenue in 2019 was LTL 1,254 million. almost 4 thousand people work in the companies. workers.