UPDATE: Engyco Plans IPO Seeking EUR1 Billion For Spain Solar

A group of top executives from the European utilities and solar power sectors said Monday they're preparing to float a company on the London Stock Exchange with the aim of raising up to EUR1 billion to buy cheap solar power assets.

The executives aim to list their U.K.-based solar energy developer, Engyco, to invest in existing power-producing photovoltaic operations, initially in Spain.

The company, which already has agreements from vendors for EUR640 million of solar assets in Spain with a capacity of 86 megawatts, is aiming to become the U.K.'s first listed independent solar power utility. The planned listing offers London investors the eventual exposure to a portfolio of solar power assets with an attractive, long-term, fixed revenue stream, Engyco said.

Engyco aims to list in London at the end of April or in early May to raise funds for cash purchases of solar assets, Engyco Chairman John Roberts told Dow Jones Newswires. Roberts was chief executive of FTSE 100 company United Utilities (UU.LN) and is a non-executive director at independent electricity generator International Power PLC (IPR.LN).

The company plans to buy 150 megawatts--including the 86 megawatts in asset-sale agreements already lined up--from among Spain's total solar installed capacity of 3 gigawatts, if it raises the full EUR1 billion. This implies a cost of EUR7 million a megawatt, Roberts said.

"The opportunity that Engyco has identified is compelling and the team which has been assembled to pursue it could not be stronger," Roberts said in an earlier statement. "The assets which we intend to manage enjoy both favorable operating conditions and a highly attractive pricing regime."

The planned listing is a bold move, as solar companies globally have suffered more than other sectors in renewable energy from the financial downturn and the credit crisis. As a result, flotations of such companies have been scarce.

But if successful, the company is looking to buy assets in Spain that were created in 2008 and qualify for the generous feed-in-tariffs available at the time.

The income streams from those projects are index-linked to inflation at a fixed rate for 25 years. After a small step down in the rate, the income streams will remain index-linked for the lifetime of the project.

Many of the targeted assets are owned by companies engaged in other businesses that want to sell their non-core assets in solar.

"The response that we've had from the owners of the assets has been extremely positive, bearing in mind that most of these are owners of assets that are not core to their main business, which is frequently construction, and some are in a degree of financial distress, Roberts told Dow Jones Newswires in a telephone interview. "We are offering to buy them for cash and that's very attractive to them."

But Engyco is likely to face competition from Spanish companies that are also trying to buy troubled smaller solar developers. Among them are Spain's biggest photovoltaic solar operator, T-Solar, and Fotowatio, in which General Electric Co. (GE) holds a 31.85% stake. T-Solar, which has 143 megawatts of photovoltaic electricity generating capacity in operation, also plans an initial public offering to finance its international expansion.

Engyco also announced a series of appointments to its board, including Thomas Krupke to the post of chief executive officer. Krupke was previously chief executive at Germany's solar module and photovoltaic manufacturer Solon SE (SOO1.XE). Pedro Mielgo, formerly chairman of Spain's national grid company Red Electrica de Espana, a subsidiary of Red Electrica Corp. SA (REE.MC), will be a non-executive director at Engyco.

Ambrian Capital PLC (AMBR.LN) CEO Tom Gaffney told Dow Jones Newswires initial interest from potential investors has been encouraging.

Engyco has appointed Numis Securities Limited and Ambrian Partners as advisers.

Company Web site: http://www.engyco.com

-By Selina Williams, Dow Jones Newswires [phone]; [e-mail]

(Jason Douglas in London and Juan Montes and Bernd Radowitz in Madrid contributed to this story.)