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After announcing last week that it was studying a capital increase of 1,500 million euros to finance the investment of 19,000 million euros in four years, EDP Renováveis informed the market that the operation begins now. investors will already have the securities in their portfolios.
The capital increase takes a different form than the issuance of new shares that is usually carried out on the Portuguese stock exchange, which is subject to requests for authorization from shareholders (in GA), disclosure of brochures, trading of rights on the stock market and other steps. , which together take several weeks.
To accelerate the capital increase, EDPR begins today with the operation, which will be carried out by a group of banks that will offer the new shares on the market to investors, in a process known as accelerated book building (ABB).
“In order to implement the capital increase quickly and efficiently for the benefit of EDPR and all of its shareholders,” Citigroup and Morgan Stanley “were mandated to initiate accelerated book building of EDPR shares in order to achieve a gross income of approximately 1.5 billion, “says the EDPR statement.
In this way, this capital increase “will be aimed exclusively at professional investors”, so small investors will not be able to participate, even those who are shareholders of the EDP group’s green energy company. In the press conference on the strategic plan, last Thursday, Stilwell justified his preference for institutional because he considered this “the most efficient way to do it.”
Only after the banks assess the banks’ interest in this ABB, will EDPR set the price of the capital increase and, therefore, also the final value of the operation that the company in updating its strategic plan had admitted that reaches 2,000 million euros. .
Minutes after EDPR issued the statement, the agency Bloomberg reported that the order book already covered the offer of 1,500 million euros, so given the indicative demand, the operation had already received enough interest to finalize. According to the news agency, the indicative price of the operation is now following.
EDP lends actions to accelerate the capital increase
This capital increase for EDPR will be carried out through an ABB because the company’s largest shareholder, EDP, will lend part of the shares it owns “to facilitate the formation and settlement of ABB prices”, and the banks will place these securities in institutional investors.
EDPR estimates that investors will receive their allocation of shares of the listed company “approximately on March 5, 2021” and, as of that date, “will have all the inherent economic and voting rights”, as is the case of receipt dividend.
Only after this transaction is completed and investors have already purchased the shares, will EDPR carry out the capital increase, which will then be subscribed by the banks that led ABB. At the end of the capital increase, the banks return the shares to EDP.
The general meeting to approve the capital increase is expected to take place “approximately on April 12, 2021.” In this case, the shareholders must agree to waive the subscription rights for the new shares, which will not be difficult since EDP controls 83% of the capital.
EDP will continue to control 720,191,372 shares of EDPR; but its position will be diluted with the entry of new shareholders. EDPR will have a higher percentage of the capital available on the stock exchange for trading (free float), which tends to benefit the attractiveness of the securities. For the CEO, the separation between the two companies still makes sense, since both have their business specialty, and he mentioned in the same press conference that EDP Renováveis is an important financing vehicle.
EDP anticipates that it will vote in favor of the capital increase. Furthermore, EDP and EDPR “will be subject to a 180-day blackout period from the delivery of the new shares in the context of the Capital Increase, subject to standard market exceptions.”
The plan that asks for financing
Over the next four years, EDP intends to invest € 24 billion. Of these, 21 billion will be allocated to the expansion of the company, and 95% of this expansion will be concentrated in renewable energies, informed the electric company, in the presentation of the strategic plan 2021-2025.
Europe and the United States will receive a large part of the investment, as they capture 80% of the total, divided equally by these two regions. By the middle of the decade, EDP expects to add 20 gigawatts of installed renewable capacity to its portfolio. The goal is to grow 4 GW each year, almost a third of which is already guaranteed. The power company intends to strengthen onshore wind capacity by 9.1 GW and offshore by 0.9 GW. Solar capacity will grow by 8 GW, to which will be added 1.4 GW of distributed generation (that is, production by the customer).
Other business areas that are gaining ground are storage, which is expected to expand to 0.4 GW, and green hydrogen, whose plans are expected to be more relevant from 2025.
(News update at 17:50 with information on demand that already exceeds supply)
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