Dhe energy group RWE obtained two billion euros of fresh money within a few hours for expanding its business with renewable energies. A capital increase by 61.5 million shares – that is ten percent of the share capital – has been placed with institutional investors, RWE announced on Tuesday evening.
At EUR 32.55, the price was five percent below the Xetra closing price of EUR 34.24 and at the lower end of the range set by the accompanying banks. In late trading, the Essen group’s share had already lost a good four percent.
RWE intends to use part of the proceeds to refinance the purchase of wind farm projects from wind turbine manufacturer Nordex. At the end of July, RWE announced that it would take over projects with a volume of 2.7 GW for around 400 million euros from Nordex.
RWE intends to invest the remaining proceeds in the additional, short-term expansion of the portfolio of renewable energies, in the further development of the project pipeline and in further growth. The plans went beyond the goal of increasing the installed capacity to more than 13 gigawatts (GW) by the end of 2022 and investing around five billion euros in renewable energies.
For RWE, which has long been decried as a coal dinosaur, the decision to say goodbye to nuclear power and coal and the change to a green electricity producer is increasingly paying off. In the first half of the year, the Essen-based company increased adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) by 18 percent to 1.8 billion euros. But competition in the business with electricity from wind, sun or water is increasing. More and more companies, including oil multinationals such as BP, are entering the market for renewable energies and causing prices to rise.
The share price showed little movement on Wednesday. The capital increase comes as a surprise, but should be positively received by investors, said analyst John Musk from the bank RBC. The strengthened balance sheet will ensure more growth and greater flexibility. With the fresh money, RWE could implement the projects recently taken over from Nordex more quickly and at the same time expand its own portfolio of renewable energies. The new papers were drawn in just 30 minutes the previous evening.
The investment bank Goldman Sachs left the rating for RWE on “Conviction Buy List” with a price target of 38.50 euros. If the energy company were to use the money it raised to increase its capacities by around 500 megawatts annually over the next ten years, RWE could create around two billion euros in additional value, analyst Alberto Gandolfi wrote in a study published on Wednesday. This would correspond to an additional 3 euros per RWE share.