Iberdrola IPO down on first day

Too much, too soon?

The shares of Iberdrola Renovables, the renewable energy unit of Spanish power utility Iberdrola SA (IBE.MC), Thursday fell sharply in their trading debut after the world's second-largest initial public offering of the year. The stock opened down about 1.3% at EUR5.23. Five minutes later, Iberdrola Renovables was down EUR0.25, or 4.7% lower, to EUR5.05.

More here. At least the multiple is a bit more reasonable - 15x EBITDA.

This was one of my concerns which I didn't go into the last post. This is a easy headline for a business reporter to write - "IPO fails, cleantech valuations too high, bubble feared." There are innumerable reasons why an IPO doesn't work - it's priced too high, too large an offering, the underwriters did a poor job of book-building, exogenous market forces aren't bullish that day, etc. This isn't to say that Iberdrola didn't get ahead of itself or that there weren't signs that wind-focused IPOs might not generate international investment. (unpack those double negatives!) Just be cautious drawing too many inferences off one day's performance.

The CEO blames market conditions in the U.S.

Iberdrola SA chairman Ignacio Sanchez Galan said today's market debut price for the group's renewables division is 'not significant' given current market conditions. Speaking to investors at Iberdrola Renovables' debut, Galan said 'this is not the best day' for a new listing given the broad European market trend.

Also, partially answering my question from my previous post on the topic:

Iberdrola plans to invest some 8.6 bln eur of its 18 bln eur investment budget to 2010 on renewables, aimed at reaching installed capacity of some 13,600 MW by that date.

I'll close on this FT article, which takes a bullish perspective long-term:

But [Iberdrola's IPO] is well above the valuation multiple on which parent Iberdrola trades, thus providing ample justification for the listing. With a market capitalisation of more than €22bn, it has created a bellwether stock for the European renewables sector as well as raising nearly €4.5bn of new capital. With €9bn of investment planned and the intention of raising gearing from nearly zero to 50 per cent net debt to equity over the next three years, acquisitions as well as organic growth seem very much on the cards.