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Enel: not electrifying
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November 2, 1999: 10:13 a.m. ET
Debut of Italian utility peters out, but still set to become world's largest IPO
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LONDON (CNNfn) - The stock market debut of the world's largest listed electricity company failed to generate interest Tuesday, as buying in the shares of Italy's Enel quickly petered out.
The pricing of 30 percent of Enel's capital by the Italian state at the top end of the range left most investors sitting on the shares as they debuted at 4.3 euros, raising $16.4 billion.
The stock of the diversified utility jumped 2.3 percent in early trade in Milan, before settling back to stand just 0.5 percent higher Tuesday afternoon at 4.32 euros.
The managers of the offering still have to decide whether to release the further 4.5 percent stake in Enel to the market, which it held in case of oversubscription. If this is taken up it would make Enel the largest IPO in history, raising a total of $18.7 billion.
This would top the $18.4 billion raised by the sale of Japanese cellular network operator NTT Docomo last year.
Traders said the issue price of 4.3 euros for Enel was on the expensive side compared to other European utilities. "The price already discounts that they will achieve the results of the fairly aggressive restructuring plan they have announced," one Milan trader told Reuters.
Officials at the Milan bourse celebrated the sale, nevertheless, as they calculated the addition of Enel would make Italy's premier exchange the fifth largest by market capitalization in Europe, pushing aside Amsterdam.
Enel is soon expected to join Milan's MIB 30 blue chip index, where it will have a weighting of around 10 percent. Its total market capitalization of 52 billion euros is also likely to gain it entry into the major pan-European indexes. This move alone will force many of the tracker funds to hold the stock.
"Given that it's going to go into all the indexes it's likely the funds are going to have to buy, but I don't know if they will do it today or a bit later," another Milan trader told Reuters.
Institutional interest on the first day of trading was weak because the government structured the sale to appeal to private investors, analysts said. A record 3.8 million Italians signed up for the shares.
-- from staff and wire reports
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