Power giant Iberdrola secures billions for network broadening ventures in the United States and the United Kingdom
Iberdrola, a leading Spanish energy provider, has announced a significant capital increase of approximately €5 billion. This move, the company's first in 16 years, aims to accelerate investments in electricity networks, primarily in the USA and the UK.
The funds raised will be used for a combination of network investments in renewable energy projects and debt reduction. The subscription period for the new shares is from September 4 to October 4, with the transaction expected to close on October 25. The new shares will be listed on the Spanish Stock Exchange on the same day.
The price range for the new shares has been set between €3.135 and €3.58 per share, and the issue price will be determined through a book-building process. Iberdrola aims to raise between €3.3 billion and €4.5 billion.
The expected return on these network investments is an average regulatory return of about 9.5%, reflecting the stable and attractive regulatory environments in these two countries. This return is a result of the new tariff frameworks, which offer a "unique opportunity for network investment" in the USA and the UK.
Iberdrola's global investment over the next six years is expected to reach around €55 billion, with approximately 75% allocated to the US and UK networks. The company has already experienced a rise in network investment by 14% to about €3.1 billion, with the regulated asset base expanding 70% over five years and nearing €50 billion. The forecast is for this asset base to grow beyond €90 billion by 2031, driven mainly by network investments in the US and UK.
This capital increase is part of Iberdrola's strategy to invest in its networks and reduce debt. The funds raised will be exclusively used for investments in networks in the USA and the UK, supporting the company's strategic focus while maintaining financial strength and dividend policy.
In conclusion, Iberdrola's capital increase of €5 billion is a significant financial move to support its investments in renewable energy projects and debt reduction, particularly in the stable regulatory environments of the USA and the UK. The expected return of 9.5% and the unique investment opportunities in these markets make this a strategic and financially sound decision for the energy provider.
The funds raised from Iberdrola's capital increase will be utilized for both network investments in renewable energy projects and debt reduction, as stated in the company's strategy. The new shares, listed on the Spanish Stock Exchange, will provide the necessary financial resources to support investments in the USA and UK, maintaining the company's financial strength and dividend policy.
