€4bn Capital Increase – Strong Demand Supports Execution, Focus on Pricing Outcome
CITI’S TAKE
PPC has today (18/05) announced the launch of the bookbuilding process for its ~€4bn capital increase via a combined Greek public/institutional offering (c.15%/85%), with potential upsizing towards €4.2–4.3bn. The deal is strongly anchored, with the Hellenic Republic to retain a 33.4% stake and CVC committing €1.2bn, alongside additional cornerstone interest. Despite the absence of pre-emption rights, existing shareholders benefit from priority allocation mechanisms. According to recent press articles, early demand appears robust (~€10bn vs €4bn deal size), suggesting ~2.5x coverage and supporting pricing expectations in the €18–19/share range. The investor mix is expected to include both long-only and hedge fund participation to support aftermarket liquidity. Overall, execution risk appears limited given demand visibility and cornerstone backing, with the key focus now on final pricing and allocation.
Timeline
The transaction follows a compressed execution timetable, with bookbuilding taking place between 18 and 20 May. Following completion of the bookbuild, pricing is expected on 21 May, with settlement scheduled for 25 May, and trading of new shares commencing on 26 May.
Pricing dynamics
The maximum offering price has been set at €19.75/share. Market indications suggest pricing is likely to fall within a €18–19 range, implying a modest discount to recent trading levels and to the pre-announcement “unaffected” price of €18.63. The inclusion of a discount is viewed as important to ensure sufficient demand depth, facilitate broad investor participation (including hedge funds), and support liquidity and trading performance post-deal. Near-term share price volatility around the expected pricing range is likely during the bookbuild process.
Demand and allocation
Initial demand appears very strong, with ~€10bn of orders reportedly received from around 200 institutional investors, implying material oversubscription relative to the €4bn base deal size. The transaction is further supported by cornerstone investors, including the Hellenic Republic and CVC, alongside indications of additional anchor participation. Allocation is expected to prioritise existing shareholders and long-term investors, although retail clawback remains likely given excess demand. There is also potential to modestly increase the deal size (to ~€4.2–4.3bn) through utilisation of treasury shares (~6% of share capital), although this remains uncertain and will depend on final demand and allocation decisions.
Valuation
We set our target price at EUR22.6/share using a SOTP approach as we think it best captures the highly differentiated segments that PPC operates. We value the operating RES fleet using a DCF with a c.7% WACC, while we assume EUR0.3m/MW and EUR0.1m/MW value creation for secured and unsecured RES growth. For data centers, we assume EUR0.6m/MW value creation on capex. We value the distribution business at RAB. We value the most profitable hydro asset at an 8x 2027e EV/EBITDA multiple, while we value the natural gas, oil, and supply segments at 4.5-6.0x.
Risks
We see the following industry and company-specific risks that could cause the shares to deviate from our target price: 1) Regulatory and political risk – PPC was affected by adverse measures during the energy crisis but managed to deliver solid results through the 2021-2022 period; 2) Operational risk given the spread of assets across technologies and geographies; 3) Power price upside and downside; 4) Macroeconomic risk; and 5) Execution risk particularly beyond FY28, where growth increasingly depends on unsecured renewables, new growth drivers and expansion into new markets.
