“History argues against innogy”

The much-lauded stock market launch of RWE’s green subsidiary innogy could still become a disappointment for investors despite the strong book-building that values the company at 20 billion euros, Frank Stocker and Daniel Wetzel write in Die Welt. With an issue price of at least 36 euros, innogy became practically overnight the energy group with the highest market value. “History shows that many investors might regret their decision," Stocker and Wetzel warn. With about 75 percent of the shares remaining with RWE, innogy’s launch counts as an equity carve-out from the parent company. According to Stocker and Wetzel, a study of 129 similar launches over the past 25 years has shown that, on average, carve-outs perform 9.5 percent worse than the benchmark. However, due to its contractually guaranteed operational independence from RWE, innogy could still become a success, the authors write.

Read the article in German here.

Read the innogy press release on the IPO in English here.