ScottishPower's renewable energy division is to be hived off and incorporated into a beefed-up subsidiary of the utility's new owner, Iberdrola, under funding plans revealed by the Spanish company yesterday.
Bilbao-based Iberdrola said it intended to restructure its renewables business, incorporating all its renewable energy-related units in Europe into its Iberenova subsidiary.
The plan is then to float up to 20% of the expanded division at some time in the fourth quarter, and use the cash raised to fund additional growth. Industry analysts believe the IPO could raise between E16bn (£10.9bn) and E20bn (£13.6bn).
An Iberdrola spokesman said: "The board approved initial preparations for the public share offer by this subsidiary, and also authorised a prior reorganisation of this business area with the goal of incorporating all renewable energy- related subsidiaries of Iberdrola and Scottish Power companies in Iberenova. The decision is fully consistent with Iberdrola's growth model, which aims to consolidate leadership in the wind energy sector, in the framework of its commitment to defending the environment and sustainable development, while conserving financial strength."
The acquisition of Scottish Power has given the Iberdrola group more than 6500mw in operative renewable energy capacity, and a pipeline of almost 38,000mw.
That pipeline includes a further 6000mw capacity for the UK and a similar amount in Spain; nearly 5400mw in the rest of the Europe; over 19,200 mw in the US, 400mw in Latin America and 500mw in the rest of the world.
Iberdrola's shares were suspended ahead of the announcement, but when trading resumed they rose 0.6% to close in Madrid at E41.34.
The power generator's shares have comfortably outperformed the utility sector on the back of heightened takeover speculation.
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