EDP unveils €25Bn investment plan

EDP and EDPR in capital call for EDP Brazil Public Acquisition Offer as chairman unveils €25Bn investment plan in London

The intended capital raise at EDP and EDPR is to support the company’s ambition for growth with the delisting of EDP Brazil unlocking value creation and fostering the streamlining of the company.
The largest and most successful Portuguese multinational energy company worldwide unveiled the €25Bn investment plan to 2026 on March 2, which will boost renewable additions and support the group’s new net zero targets.
With the aim of promoting corporate structure simplification, EDP has announced the launch of a 100% tender offer over its listed subsidiary EDP Brasil, 56.05% (consolidates 57,55%) owned, to acquire the shares held by the minority shareholders.
To finance the tender offer, EDP intends to raise equity, through the increase of share capital, in an amount of €1Bn. The launch and completion of this transaction will be subject to corporate approvals and favourable market conditions being met.
EDP already has the commitment of CTG (China Three Gorges), ADIA (Abu Dhabi Investment Authority) and GIC (China Investment Corporation) in an aggregate amount of up to €0.6Bn, subject to final market terms. The delisting of EDP Brasil is expected to be concluded in the second half of 2023. Brazil is a sizeable market with solid fundamentals and energy transition opportunities, where EDP will continue to focus on networks and renewables through a portfolio reshuffling.
Since 1995, EDP Brasil has grown to 2 electricity distribution concessions with 3,8 million clients, transmission lines with over 2 thousand kms and 2GW of hydro capacity. EDP Renewables Brazil, founded in 2009, has 1.1 GW in renewables in operation. This operation will strengthen the focus on renewables and networks segments, with reduction of the exposure to hydro and exiting from thermal.
The 23-26 Business Plan will support EDP’s net zero commitments and follows a selective and disciplined approach, allocating 85% of the total investment to renewables, clients and energy management and 15% to electricity networks across fast growing and low risk markets in 4 regional hubs: Europe (40% of the investment plan), North America (40%), South America (15%) and Asia-Pacific (5%). EDP’s yearly investment rate will increase by 30% to 6,2 billion euros, while maintaining a sustainable growth and ESG excellence within a future proof organisation.
“Today we ramp up our ambition to lead the energy transition supported by a competitive and resilient portfolio, strong financials, an empowered team and the will to contribute to a climate positive world for the coming generations. This Business Plan reinforces our growth ambition, while pushing even further our commitment to the planet and creating superior value for all”, said EDP CEO Miguel Stilwell de Andrade.
Of the €25Bn in the investment plan, €24Bn will be focused on Renewables and €4Bn will concentrate on electricity networks, representing an annual gross investment of €6.2Bn — 30% higher versus previous Business Plan.
Renewables deployment to increase to 4.5 GW per year, totalling 18 GW gross additions by 2026 aiming to a renewables installed capacity of 33 GW by 2026 and with the ambition to reach more than 50 GW by 2030.
The Renewables investments will be diversified across different technologies including Wind Onshore (40%), Solar PV Utility Scale (40%), Solar Distributed Generation (12%), Wind Offshore (5%) and Storage and Hydrogen (3%).
“We are leveraging our superior portfolio and infrastructure as a competitive advantage for increased renewables deployment based on hybridisation and repowering”, states the company.
EDP will also invest €3Bn in digitalisation and innovation to foster efficiency and sustainable growth.
The company has also reiterated a commitment to be coal free by 2025, to have 100% renewables generation by 2030 with a Net Zero emissions target by 2040.
As to employment opportunities, EDP plans to create 3,000 jobs by 2026 and communities empowerment through a €200 million investment in social impact initiatives.
The company is on target for a recurring EDITDA of €5.7Bn by 2026, a 6% CAGR in 2022-26, a recurring net income of €1.4-€1.5Bn by 2026, with 12%-14% 2022-2026.
The company has also announced a new dividend policy, with a target payout ratio of between 60-70% and an increase in dividend floor to €0.20% per share in 2026.

Photo Lusa: Nuno Veiga