UPDATE 3-EDP Renewables shares slip on bourse debut

Wed Jun 4, 2008 6:07pm BST

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(Updates with comment by EDP Renewables CFO, closing prices)

By Axel Bugge and Elisabete Tavares

LISBON, June 4 (Reuters) - EDP Renewables (EDPR.LS) shares fell on their Lisbon stock exchange debut on Wednesday as investors gave a lukewarm welcome to the world's second-largest windpower company after its initial public offering (IPO).

Traders and analysts said the stock fell partly due to the wider declines in share markets, but also on the perception that the IPO may have been priced too high at 8 euros a share.

It closed 4.37 percent down at 7.65 euros, its lowest of the session and far below its early high of 8.06 euros in the first few minutes of trading. Lisbon's PSI20 .PSI20 stock index closed down 1.41 percent, and the DJ Stoxx utilities index .SX6P was down 1.521 percent.

Iberdrola Renovables IBR.MC, the world's largest renewable energy firm, which launched its IPO in December, was 3.21 percent lower at 4.53 euros.

"There doesn't seem to be great euphoria about the price," said a trader.

With oil prices near record highs, EDP Renewables had hoped to take advantage of growing demand for clean energy to tap into investor interest.

Energias de Portugal (EDP.LS), which sold 25 percent of EDP Renewables in the IPO, had set an initial range for the IPO of its renewable energy unit at 7.4 euros to 8.9 euros. It opted for 8 euros on Monday.

EDP Renewables Chief Financial Officer Rui Teixeira said the price was fair and blamed the slide on poor overall markets, adding that there is potential for the shares.

"It was a bad day in the markets," Teixeira told Reuters. "You can't value a company on the basis of its shares during one day. None of the company's fundamentals have changed."

"But maybe the market concludes that in spite of a discount to Iberdrola Renovables, that discount is justified," said a foreign analyst who asked not to be named.

Another analyst said the declines were logical, considering that markets had not favoured IPOs this year. EDP Renewables is Europe's biggest IPO so far in 2008.

The second analyst said the declines could also be related to the fact that only the 5 percent tranche of EDP Renewables offered to the general public started trading on Wednesday. The 20 percent for institutional investors will start trading on June 6.

"Either way, institutional investors have not been able to start trading yet," he said.

Analysts have said EDP Renewables will offer investors a pure play on windpower, unlike other alternative energy companies, such as Iberdrola Renovables, that offer other energy sources, too.

EDP has quickly built up its windpower business and now has wind parks in countries including Spain, Portugal, France and Poland. In the United States, EDP bought Horizon Energy from Goldman Sachs for $2.2 billion last year.

Against a background of sky-high oil prices, EDP wants 67 percent of its electricity production to come from alternative energy by 2015, up from 39 percent currently.

EDP hopes to reach installed windpower capacity at EDP Renewables of 7,600 megawatts (MW) by 2010, up from 3,640 MW at the end of 2007. (Additional reporting by Elisabete Tavares, editing by Will Waterman)