Innogy Frankfurt Stock Exchange IPO

Overview:

• German utility RWE's green energy business, Innogy, has raised around €5 billion through its IPO in Frankfurt, making it the biggest debut on the stock exchange since 2000, the third largest IPO in the country's history and the biggest in Europe since Glencore's in 2011. 
• Innogy shares began trading in Frankfurt above the offer price at €37.30, hitting a low of €35.95. 
• Ahead of trading, RWE, which retained control of around 75% in Innogy, sold 10% in the company at a rate of €36 a share, and 15% through a private placement.
• During the book-building, Blackrock subscribed to €940 million in Innogy shares, meaning it is the company's second-largest shareholder with around 5%.  
• The IPO gave Innogy a market cap of around €20 billion, only eclipsed in value in Germany by Deutsche Post's (€6.25 billion) and Infineon's (€6.07 billion). 
• Innogy was formed in 2016 when RWE span off its renewable energy and retail business, and power grid assets.
• RWE's restructuring was a reaction to the challenging wholesale electricity market in Germany, created by a change in energy policy.
• In 2010, Germany passed legislation to support Energiewende (energy turn), a shift towards green energy through - among other elements - phasing out coal-fired and nuclear power plants and focusing on increasing renewable production and improving efficiency.
• The policy has meant the country's biggest utilities RWE and Eon, which historically focused on conventional energy, have struggled to stay profitable as the market was flooded with electricity, causing prices to fall significantly.  
• Both businesses subsequently saw share price slumps as investors dumped the companies' stocks. 
• At the start of 2016, Eon undertook a similar restructuring to RWE, although taking a different strategy and hiving off its conventional power and energy trading business in a new company, Uniper, and retaining the green energy business under its original brand.  
• Uniper shares began trading in Frankfurt in September 2016, valuing the company at around €4 billion after the first day of its stock's sales.
• Eon's share price fell by 13% on Uniper's first day of trading.  
• RWE's share price declined by around 5% in the morning of Innogy's debut.  

Ben Naylor - Regional Editor