Iberdrola launches $5.9 billion capital increase to fund growth in US, Britain
The company plans to increase its annual investments to around 15 billion euros from a current level of around 12 billion euros, building on its shift towards upgrading and expanding power grids in countries where returns are steady and healthy, such as the U.S. and Britain.
In the next six years, it will invest some 55 billion euros in power grids, more than 80% in these two countries. The planned investment represents a 75% increase over the previous six years.
As a result, the value of its grid assets, whose returns are regulated and guaranteed, will top 90 billion euros by 2031 - 75% of which will be in Britain and the U.S. - from 55 billion euros this year and just 30 billion euros at the beginning of the decade.
The weight of its Spanish home market in the network business is set to decline significantly, as a share of both investments and regulated assets.
Spanish utilities have recently warned that the country risked losing critical investments in grids to other countries as the remuneration on grid assets proposed by regulators was set below what they expect.
The cash raised by Iberdrola's capital increase, along with debt, operating cash flow, asset sales and partnerships will help fund the new strategy the company will present in September. No further equity raises are expected until at least the end of the decade, Executive Chairman Ignacio Sanchez Galan said in a call with investors.
The shares offered through a process of accelerated book-building were set to be priced at 15.10 euros, one of the bookrunners said. Iberdrola's share price closed at 15.895 euros on Tuesday.
Spain's stock market regulator suspended trading of Iberdrola's shares on Wednesday morning.
The capital increase was unexpected, RBC analyst Fernando Garcia said.
Separately, the utility said first-half net profit declined 14% from a year earlier, when results were boosted by the inclusion of the sale of gas assets in Mexico.
Net profit for the period was 3.56 billion euros ($4.18 billion) compared to 4.1 billion euros a year earlier.
Excluding one-offs, profit was up 20%, it said.
($1 = 0.8523 euros)
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