Italian group Eni is pressing ahead with a planned listing in Milan of its retail and renewable power business as it seeks to capitalise on renewed investor appetite for energy stocks in an otherwise depressed market.
The spin-off is the biggest structural move yet by an oil and gas major in response to pressure to reduce carbon emissions and pivot to greener forms of energy.
It comes as the value of initial public offerings in the US and Europe has collapsed this year as the war in Ukraine and rising inflation and interest rates have forced many businesses to shelve plans to go public.
At the same time, soaring fossil fuel prices have driven a rally in European and US energy stocks.
Eni’s share price is up 16 per cent since January, while rivals Shell and BP have risen 47 per cent and 37 per cent respectively, far exceeding the 2 per cent rise in the FTSE 100.
Eni chief executive Claudio Descalzi said listing a minority stake in Plenitude, which includes Eni’s retail, renewables and mobility units, would “unlock significant value” and accelerate its growth, while helping the Italian oil group cut its carbon emissions.
The three divisions, dominated by retail business Eni gas e luce, which has about 10mn customers, is forecast to make combined earnings before interest, tax, depreciation and amortisation of €600mn this year. Eni hopes that will rise to €1.3bn by 2025.
RBC Capital Markets estimates Plenitude could be valued at about €8.4bn.
Oil and gas producers, which face a higher cost of capital than pure renewables businesses, are under pressure to invest more in clean energy while still generating profits from legacy assets to pay shareholders and fund the transition.
So far, most competitors, including Shell and BP, have argued that they will be better able to succeed as integrated companies.
Eni predicts that under the new structure, Plenitude will have access to cheaper funding, but will still benefit from the continued integration of the renewables division and gas and power business.
Eni, which has previously indicated it could sell up to 30 per cent of the business, said it would maintain a majority stake but did not disclose how much it planned to list.
Oswald Clint, an analyst at Bernstein, said Plentitude’s existing customer base meant it was a very different proposition to many other clean energy IPOs, adding that record wholesale prices for gas and power meant this could be “a good time” to do it.
“This is not a pure-play renewables company launching with huge ambitions of future demand or sales,” he said. “This is a company that has 10mn to 11mn customers to which you are selling gas and power.”
Plenitude aims to deliver fully decarbonised energy products to all of its customers by 2040.
The renewable power arm has about 1.4GW of installed capacity, which the company expects to grow to 6GW by 2025 and 15GW by 2030.
The mobility unit is the second-largest operator of vehicle-charging points in Italy with 6,500 across the country. It plans to roll out more than 31,000 charging points by 2030, including an expansion of the network into other parts of Europe.
