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ACCIONA: POSSIBLE IPO OF RENEWABLES BUSINESS (ANÁLISIS BANCO SABADELL)

ANA is rising +9% after having announced that the Board of Directors will meet today to study the approval of an IPO (not specified whether it is initial or secondary) of its renewable energy parent company. No further details have been given, although ANA has stated that on the meeting’s conclusion more information will be given (we understand this will come with the FY2020 results presentation).
Note that ANA’s renewable energy division currently has 10,500 MW installed worldwide (8,443 MW consolidated, of which 53% is in Spain; 83% wind, 10% hydro and 7% solar), accounting for 73% of EBITDA’20e and 67% of group EV. Likewise, it has a pipeline of 15,000 MW, of which 5,000 MW is expected to be installed before 2024 (€~4 Bn investment).
MARKET IMPACT
Positive news, as we believe that the spin off of the Renewable energy business will draw strong interest from investors and could help maximise the price of this division, and it will also lead to a stronger strategic focus for ANA that will, in turn, result in a clearer strategy. Given that the company does not break down the division’s debt, we cannot estimate its equity value.
Although the company has not specified the type of placement, we understand that it should be a secondary offering that would allow it to raise capital to speed up the growth pace in this division, and that ANA would continue to control the subsidiary (>50%), as we recall that we expect the company to end the year with a NFD/EBITDA ratio of 4.7x (vs. 4.4x-4.6x from the guidance), which could be slowing growth.
We will pay close attention to any additional information provided on the possible operation to revise our valuation accordingly, as this could have significant implications on the company’s plans and growth capacity in renewables going forward. We value ANA by SOTP, applying a 5% WACC to the Renewables division and a 6.8% WACC to the International division. ANA is trading at ~11x EV/EBITDA’21 (vs. the multiple implied in our valuation of 8.5x in the case of the entire company and 9x in Renewables). In principle (and according to our estimates), we might say that, to reach the current trading levels, the company would have to install at least 6.5 MW additional to those already planned through 2024.
With today’s +9% rise, ANA has outperformed the IBEX by +14% thus far this year.