EDP’s renewable unit may expand in Canada, Mexico 

EDP-Energias de Portugal SA, Portugal’s largest utility, said its renewable-energy unit may expand in Canada and Mexico as it raises as much as 2 billion euros ($3.2 billion) in Europe’s biggest initial public offering so far this year.

The EDP unit is selling stock to help finance plans to develop wind energy parks from Poland to the U.S. and meet rising demand while emitting less carbon dioxide. Last year’s purchase of Horizon Wind Energy LLC of Texas from Goldman Sachs Group Inc. helped the former Portuguese power monopoly become the world’s fourth-biggest wind-power operator.

“We are considering going into nearby markets like Canada or Mexico,” EDP Chief Executive Officer Antonio Mexia said in an interview in London today. “We are not in a rush.”

Lisbon-based EDP, Portugal’s largest power company, is selling about 225 million new shares of its renewable-energy division, representing a 25 percent stake in that unit, at 7.40 euros to 8.90 euros apiece. That price range values the entire unit, whose full name is EDP Renovaveis SA, at as much as 8 billion euros.

The IPO price will be set June 2 and EDP Renovaveis last yesterday said it attracted bids from individual investors for 5.56 times the shares available. The IPO may be the biggest in Europe this year, topping New World Resources NV’s $2.5 billion IPO in May, according to data compiled by Bloomberg.

EDP stock slipped 2 cents, or 0.5 percent, to 4.06 euros in Lisbon. The shares have declined 9.3 percent this year, giving EDP a market value of 14.8 billion euros.

Higher Wind Capacity

The renewable-energy unit aims to install 1.4 gigawatts, or 1,400 megawatts, of wind energy a year on average through 2012 to increase wind capacity to more than 10.5 gigawatts across Europe and the U.S. The unit will invest about 2 billion euros a year through 2012, Mexia said today.

The renewable-energy unit posted net income of 26.6 million euros in the first quarter after boosting gross installed wind energy capacity to 3,706 megawatts. EDP’s list of future wind energy projects totals 16,210 megawatts and includes units across Europe and the U.S. A 1-megawatt plant running at full capacity can supply about 2,000 average European homes.

EDP has “bargaining power” for purchasing wind energy turbines for its projects, Mexia said. Suppliers of wind energy turbines to EDP include Vestas Wind Systems A/S of Denmark and Gamesa SA of Spain.

Mexia said the U.K. wind energy market is “crowded.” “Unless it gets less crowded, I think we will focus where we are making a difference, like the U.S. market and Iberia,” he said.

“Brazil is a market of the future,” Mexia said. “More favorable” regulation for wind energy is needed in that country, he said.

The utility chose Banco Comercial Portugues SA, Banco Espirito Santo SA, Caixa Geral de Depositos SA, Citigroup Inc., Morgan Stanley and UBS AG as global coordinators of the renewable-energy unit’s IPO.

By Angeline Ong and Juan Pablo Spinetto

Bloomberg

21 May 2008