Eni could list stake in new retail-renewable spin-off

Italian oil and gas company Eni is looking to spin off a new combined retail and renewable energy business next year and sell a minority stake to further fund its energy transition plans.

According to a Reuters article which quoted a source close to the matter, the business which would include renewable power generation and energy sales to customers could be worth in the region of 10 billion euros ($11.9 billion).

Eni formally announced its climate ambitions last month, pledging to be carbon neutral by 2050 in an attempt to keep pace with the industry.

As part of those plans, Eni said it would merge its renewable energy and retail businesses to make it one of Europe’s biggest clean retail players, growing its customer base together with its green ambitions. Eni also stated that the business would double its core earnings to 1 billion euros ($1.2 billion) in 2024.

The source told Reuters that the new unit would be up and running by June and that the most likely option on the table was to spin it off and list 20-30 per cent sometime next year. Other options include a merger with an existing company or teaming up with partners but are far less likely.

One of the reasons for the spin-off is the fact that shares in renewable companies have soared over the past year. At the same time, oil company shares have plummeted due to investor concerns over the role of such companies in a low-carbon economy on top of the problems caused by the pandemic.

According to Reuters’ source, spinning off Eni’s new division would more than double its trading multiples and would also provide scope to raise 2-3 billion euros to fuel growth in its renewables business.

An HSBC research report in January said public listings of low carbon operations could increase the value of these businesses by five to six times outside an oil major rather than inside, based on current valuations of renewable companies.

Merging the retail and renewables businesses will allow Eni to increase its retail base some 50 per cent by 2030 to 15 million customers and to use 45 per cent of its green power production to serve customers and help to meet Scope 3 targets, which include emissions from products sold.