Italian energy giant Eni is set to transition a part of its business model by negotiating a sale of a 20% stake in Plenitude, its renewables, retail, and electric vehicle (EV) charging unit, to Ares Management’s credit arm. Eni targets a valuation between €9.8 and €10.2 billion for Plenitude. The potential deal represents a calculated approach by Eni to secure funding while maintaining a stake in the expanding green energy sector, a trend being observed across the energy industry globally.
Eni established Plenitude in 2021, and since then, other companies have taken similar actions to streamline their focus on renewable energy and sustainability. For instance, BP and Shell have made substantial investments in renewables, while TotalEnergies has been actively growing its renewable footprint globally. This movement toward green investments comes in an effort to align with global sustainability goals and reduce carbon footprints.
Why Is Eni Selling a Stake in Plenitude?
The intended sale of Plenitude aligns with Eni’s “satellite model” strategy to attract external capital, facilitating the development of its new enterprises while using cash flow from traditional businesses for shareholder dividends. This approach allows Eni to harness external resources to fund growth in the renewable sector while maintaining its focus on creating value in its established oil and gas operations.
What Does Plenitude Offer?
Plenitude, originating from the merging of Eni’s renewable, retail, and e-mobility businesses, currently operates over 4 GW of renewable energy capacity. It aims to expand to more than 10 GW by 2028 and reach 40,000 EV charging points by 2030. This positions the company as a significant player in the push towards sustainable energy solutions. Its strategy includes electricity and gas distribution to around 10 million customers across multiple countries.
The negotiations with Ares come after a notable trend where Eni has previously sold stakes in its subsidiaries to increase liquidity and grow its green portfolio. The previous sale of a 10% stake in Plenitude to Energy Infrastructure Partners (EIP) and the sale of a 25% interest in Enilive to KKR highlights the company’s consistent strategy of leveraging partnerships. This pattern indicates that Eni is not only expanding its resources but also diversifying investments to meet the demands of a rapidly changing energy landscape.
An interesting aspect of this deal is the involvement of renowned international investors, underscoring Plenitude’s strong growth potential and multifaceted business model. Many potential investors have shown interest, highlighting attractiveness in the long-term viability of Plenitude’s operations, especially in the context of the evolving global energy market.
Future prospects for Eni and Plenitude depend on the successful completion of these negotiations. This transaction aligns with a broader industry trend of companies optimizing their business portfolios to strategically address the increasing demand for renewable energy solutions. These efforts signify a shift in energy companies’ mindset towards sustainability.
As the energy sector continues to redefine itself amid global climate challenges, Eni’s strategic moves encapsulate a balance between traditional energy operations and adapting to global renewable energy trends. The outcome of Plenitude’s stake sale may set a precedent for other energy firms considering similar ventures, reshaping investment patterns in the industry.
