Greenvolt capital increase. A 100 million euro operation in 10 questions and answers

Less than a year after raising 150 million euros in a media capital increase, which projected it into the first division of the Portuguese stock exchange, Greenvolt is returning to the market to ask investors for another 100 million, in order to finance growing faster than originally expected. Part of the money is already guaranteed by the reference shareholders of the company headed by João Manso Neto. We explain here what the capital increase will consist of.

What does this capital increase consist of?

Greenvolt will issue new shares for a maximum amount of 99.99 million euros, subject to a subscription order between June 20 and July 4, at a price of 5.62 euros per share, a lower value than the share price of the renewable energy company, which closed on Friday July 17 at 6.89 euros per share.

What is the reason for this capital increase?

Greenvolt explains, in the announcement of the operation, that the capital increase “aims to significantly strengthen the company’s growth plan, by accelerating investments in renewable energies”. The objective is to use the liquidities of the operation to carry out “more quickly” the investments planned in its strategic plan and the concretization of business opportunities. The money will be used to accelerate the development of new renewable energy projects, to finance the equity component of some of these projects until they are self-financing and to obtain additional liquidity.

But hadn’t the company recently raised capital?

Yeah. In July 2021, Greenvolt carried out a capital dispersion, going public on Euronext Lisbon, an operation by which it raised 150 million euros on the market. However, the company justifies the need for this capital increase (less than a year after its IPO) with a greater strategic ambition: the portfolio of Greenvolt projects has grown from the 3.6 gigawatts (GW) presented in the dispersion capital to the current 6.6 GW.

Who can participate and at what cost?

As in similar operations, this capital increase gave the current shareholders of Greenvolt a preferential subscription right to the new shares, allowing them to guarantee the purchase of the new shares, or to sell these rights on the market. But those who are not yet a shareholder can also, from this Monday, June 20, give an order to subscribe to the new shares of Greenvolt, until July 4. The results of the offer will be announced publicly on July 5. Subscription fees vary from bank to bank. Investors are invited to find out from their financial intermediary about the commissions and other costs associated with a possible subscription for securities.

After I get the shares, can I sell them whenever I want?

The first trading day for new Greenvolt shares is July 11. From there, investors can sell whenever they want. However, the main shareholders of Greenvolt, namely Promendo Investimentos, Actium Capital, Livrefluxo, Caderno Azul, 1 Thing Investments and KWE Partners, have already committed not to sell the shares for at least 180 days (six months).

What will Greenvolt’s shareholding look like?

The reference shareholders of Greenvolt mentioned above have undertaken to subscribe to the new shares of the company, in proportion to their holding, which guarantees that 48% of the new shares are already reserved for these investors. Altri has already indicated that it will not exercise its rights, so it will dilute its stake from the current 19% to around 16.6%. More than half of Greenvolt’s capital will remain in the hands of Altri’s reference shareholders. There is also a commitment by the banks participating in the operation (BNP Paribas, Santander, CaixaBank, Caixa BI, Mediobanca and JB Capital Markets) to take the shares of the capital increase which may not be covered by the demand from the investors in the market.

What has been the evolution of the Greenvolt share?

Greenvolt went public on July 15, at 4.25 euros per share. Upon its debut, its shares soared 25%. Last Friday, June 17, the Greenvolt share was worth 6.89 euros, or 62% more than the IPO price. They reached their highest on April 6, when they closed the session at 7.81 euros per share.

What are the company’s prospects?

Greenvolt currently has a portfolio of projects to be developed of 6.6 GW (compared to 3.6 GW at its IPO), of which 2.7 GW are ready to be built or should enter into operation by 2023 ( a year ago, the company only had 1 GW in this advanced state). While today Greenvolt operates its own capacity of 188 megawatts (MW), of which 76% is biomass power plants and 24% wind and solar power plants, the plan for 2026 is to have 2,100 MW operational, of which 7% is biomass and 93% with wind and solar energy. Greenvolt plans to invest between 3.8 and 4.2 billion euros over the next five years (more than double what it planned when it went public) and to accelerate the generation of EBITDA ( earnings before interest, taxes, depreciation and amortization) and net income.

What risks does the company present?

As with any capital increase, the risks of the company are described in the prospectus, and cover a diverse set of potential occurrences that could limit the company’s generation of results. They range from the cost of biomass and the potential scarcity of this resource to the fact that these mills depend primarily on the continued operation of Altri’s pulp mills. Regulatory risks (and the energy sector has seen some government and regulatory interventions that companies contest) can also threaten company results. And there are also risks that part of the project portfolio cannot go ahead due to licensing issues, for example. However, these are cross-cutting risks for energy companies.

How does Greenvolt compare to other energy companies?

Greenvolt began, when it was listed on the stock exchange, as a renewable energy company which combined part of the production of electricity with guaranteed remuneration (biomass power plants, already operational) with the development of new wind and solar projects (including the remuneration depends on the regulatory framework of each geography). But over the past year, Greenvolt has not only significantly increased its prospects for wind and solar (which will have a greater weight than initially expected by the company) but has also moved forward with several acquisitions to develop projects distributed (or decentralized) solar energy. ) in Portugal and Spain.

Greenvolt is one of the five energy companies that make up the 15th of the Portuguese stock market index, the PSI. The index also includes EDP, EDP Renováveis, Galp and REN. REN is an electricity and natural gas network management company whose activity is fundamentally regulated, and whose revenues are stable and predictable. And Galp, despite its bets on solar energy, remains a company whose revenue is based primarily on oil exploration. The EDP group is, among the energy companies listed on the Portuguese stock exchange, the one that most resembles Greenvolt in terms of activity profile, but on a much larger scale and with relevant differences, either because EDP is geographically more diversified, or because it has a significant component of energy marketing to the end customer and also a network activity (Greenvolt focuses on the development of renewable energy projects and on the emerging activity of decentralized generation).

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