PPC’s capital offering to lower Greece’s ownership to minority stake

Greek state-controlled power utility PPC wants to increase its share capital by at least EUR 750 million, but the government won’t participate, which will reduce its stake from 51% to 33% or 34%. The funds from the controversial move are intended for the energy transition toward renewables, digitalization and expansion in Southeastern Europe.

Representatives of the government in Athens responded to the opposition’s attacks, prompted by a plan to cut state ownership in Public Power Corp. (PPC or DEI in Greek) from 51% to 33% or 34%, with a claim that Greece would still be a dominant shareholder with a so-called blocking minority stake. The board of the coal and power producer decided to offer shares to private investors and get a minimum of EUR 750 million, while the state opted not to participate.

State officials claim a 34% stake would be sufficient to keep the steering wheel at PPC

The government argues that it has no spare funds for increasing the quality of the services and investing in facilities that would produce cheaper electricity. At the same time, it expressed confidence that 34% is enough to keep it at the steering wheel in the company.

“The share capital increase will enable PPC to complete its ambitious transformation plan that started in 2019 and is already yielding tangible results, as well as accelerate its transformation into a financially and environmentally sustainable, modern digital utility. Through this transaction, PPC will be able to accelerate its capex plan in renewables, targeting a significant upscale of the group’s operating profitability. At the same time, PPC will be able to capitalize on a number of compelling opportunities in the Greek and South-Eastern European energy sector,” the company’s Chairman and Chief Executive Officer Georgios Stassis said.

The company’s subsidiary PPC Renewables is responsible for the energy transition to clean sources.

Transaction set to be completed in early November

The shareholder meeting is scheduled for October 19. PPC intends to complete the transaction in early November. It said investors showed substantial interest. The company also pointed to the strong demand for its green bonds in the sales in July and March.

Existing shareholders may get priority in the share offering so that they can maintain the current percentage of ownership in PPC

The board suggested existing shareholders should be given priority in the equity offering so that they are able to at least maintain the size of their stake. Based on demand, the company may decide to raise more capital in the process.

EnergyPress reported, without naming its sources from PPC, that there were already contacts with investors in the United States, Italy, Spain, Britain and Germany. The move also raised eyebrows in the Greek public, over potential insider trading. According to the article, the company could be able to raise more than EUR 1 billion.

PPC eyes investments in Romania, Bulgaria

As for expansion plans in the Balkans, PPC highlighted opportunities in Romania and Bulgaria. It pointed to the projected annual growth of 8% and 15% per year, respectively, in renewables capacity by 2030. It translates to 6 GW for Romania and more than 3 GW for Bulgaria, the utility wrote in a presentation.

The government-controlled utility now has a plan to boost its renewables capacity from 3.4 GW to 8.2 GW by 2026 and is counting on the capital increase to lift the target to 9.1 GW

PPC said the share capital increase would boost its investment program through 2026 to EUR 8.4 billion, so it can increase its installed renewable power capacity including hydro and storage to 9.1 GW (now it is targeting 8.2 GW), compared to the current 3.4 GW.

There is 10 GW in such projects in the pipeline, of which 3 GW are already secure, according to the utility. PPC plans to replace all its coal-fired thermal power plants by 2025 and eventually build solar power plants of a combined 3.6 GW in the country’s two lignite hubs or almost 4 GW in total in the country.

The government-controlled company accumulated EUR 2.5 billion in losses in 2018 and 2019, after which it returned to profitability.

RWE deal to be signed within several days

PPC is expected to finally sign a partnership agreement with RWE Renewables from Germany early next month. The local media learned the joint venture would start building solar power plants in Amyntaio in Western Macedonia, the heartland of the coal industry, in the first half of next year. The Greek utility has plans for 1.5 GW in photovoltaics there, while it is said to be contributing projects for 940 MW in lignite open pits to the new entity.

On its side, RWE Renewables, which is set to hold 51% in the joint venture, is securing an overall 1 GW in solar power projects.

Of note, PPC officially accepted the offer from Macquarie Infrastructure and Real Assets Group (MIRA) for a 49% stake in Hellenic Electricity Distribution Network Operator – HEDNO or DEDDIE. The giant Australian investment firm came up on top in the tender with EUR 2.1 billion through its Spear WTE Investments.

PPC is entitled to EUR 1.3 billion, which it earmarked for debt payments and investments in green energy.