Under the agreement, EIP will invest in Plenitude through a capital increase of up to 700 million euros, which, post-transaction, would give the Swiss fund approximately 9% of the company.
The initial capital increase will amount to 500 million euros, with the option for EIP to go up to 700 million euros by early 2024.
"The transaction implies an equity value of Plenitude post money of up to around 8 billion euros and an enterprise value of over 10 billion euros," Eni said in a statement.
The deal is expected to set an indication for the price of Plenitude in a potential future listing on the Milan stock exchange after the energy group had to postpone an initial public offering (IPO) in June last year.
Financial analysts said the deal could provide a rich valuation floor for the group's low-carbon business.
"Eni's decision to postpone the Plenitude IPO was a smart move, with today's equity valuation above the 6-7 billion euros that Eni received when they were planning the listing," broker Bernstein said.
After the transaction, the group is under no pressure to list the unit and could wait for the right market conditions to take it public.
Under Chief Executive Claudio Descalzi, Eni is applying what it calls a "satellite" approach to create independent units specialising in specific activities and able to attract investors focused on those businesses.
The energy group could use a similar strategy to grow other units including its biofuel business, dubbed Enilive.
"Thanks to this transaction we highlight the value of Plenitude within Eni, we strengthen Plenitude's financial structure to further support its energy transition and growth path, and we establish a long-term partnership with a leading international financial investor," Descalzi said in the statement.
VERTICALLY INTEGRATED
Plenitude - which manages Eni's retail customers and offers renewables, gas and electric vehicle charging - is expected to have earnings before interest, taxes, depreciation and amortisation (EBITDA) of around 900 million euros this year. EBITDA is seen reaching 1.8 billion euros in 2026.
The unit is projected to have an installed renewable capacity of around 3 gigawatts (GW), up from 2.2 GW in 2022. The installed capacity is set to surpass 7 GW by 2026.
EIP, which has recently invested in other renewable businesses including Spain's Repsol Renovables, said it liked the vertically integrated structure of Eni's Plenitude.
"Diversified businesses with control over their own margins and value chains, like Plenitude, are optimally positioned to thrive in markets as the energy transition continues," Tim Marahrens, EIP Partner and Co-Head of investments, said in a statement.
Rothschild acted as financial adviser to EIP, while Mediobanca and Goldman Sachs advised Eni on the deal.
