Shares of EDP Renovaveis (EDPR.LB), the world's fourth-biggest wind-power producer, fell 2% soon after debuting Wednesday on the Euronext Lisbon stock exchange in Europe's largest listing so far this year.
At 0941 GMT, EDP Renovaveis shares were trading at EUR7.84, below the offer price of EUR8 a share, which had been set in the middle of the indicative price range. At this price the company has a market capitalization of EUR7.07 billion.
A Lisbon-based trader said EDP Renovaveis is under pressure from overall negative sentiment in Europe but that investors' appetite for renewable energy companies will likely help the share price to pick up later in the session.
EDP Renovaveis' parent company, EDP-Energias de Portugal SA (EDP.LB), said it would raise close to EUR1.8 billion by offering 25% of its renewable energy unit in the IPO. That figure includes shares allocated to investors by an over-allotment option. Without that option, the IPO would bring EDP nearly EUR1.6 billion.
The company will use the proceeds to finance its growth strategy and pay off its debt. EDP Renovaveis plans to boost its electricity generation capacity more than sixfold in coming years to 24,000 megawatts.
The company is well positioned for growth in Portugal, as the country aims to produce 45% of its electricity locally from renewables by 2010. That is the third-most ambitious target in the European Union, after Sweden and Austria, and well above the 39% target Portugal had agreed with the E.U.
EDP Renovaveis enters the Lisbon market as the exchange's fifth-largest listed company. Its shares will enter the reference index PSI20 on July 1, replacing building company Grupo Soares da Costa SGPS SA (SCOAE.LB), according to Euronext Lisbon Chairman Miguel Athayde Marques.
Of the total 225.4 million shares offered, 80% were aimed at institutional investors while the rest were allocated to retail investors.
The company now has a free float of 25%. EDP will hold 60% directly and another 15% through its Spanish unit Hidrocantabrico Energia SA.
EDP Renovaveis is the world's fourth-largest renewable energy company and became the world's fourth-biggest wind-power producer after acquiring U.S. wind-power company Horizon Wind Energy last year.
EDP Renovaveis' total electricity output capacity is 3,640 megawatts, with its main producing assets in Europe and the United States. The company's production capacity in Spain is 1,639 megawatts, in the U.S. 1,490 megawatts, in Portugal 424 megawatts, and in France 87 megawatts.