Foreign Funds

RWE Faces Sheikh Up

Things are looking up. RWE towers in Essen. Source: dpa
Things are looking up. RWE towers in Essen.
  • Why it matters

    Why it matters

    If RWE gets an injection of fresh capital from a new shareholder, it will be able to boost profits and expand in the Middle East.

  • Facts

    Facts

    • Investors from Abu Dhabi are in talks with RWE about acquiring a 10 percent stake in the company.
    • They would invest around €1.4 billion and seek a strategic partnership.
    • Several municipal authorities have stakes in RWE and are concerned about share dilution.
  • Audio

    Audio

  • Pdf

Germany’s biggest power producer, RWE, is a company rooted in place. Founded in 1898, its original name, Rheinisch-Westfälisches Elektrizitätswerk, highlights its origins in the heart of the Rhine and Ruhr valleys of industrial western Germany.

For much of its history, the utility was controlled by the municipal authorities in the region — mostly small- and mid-sized industrial towns — which today still control 25 percent of its shares.

But now more far-flung shareholders are interested. Handelsblatt has learned that investors from Abu Dhabi may be considering acquiring a stake in RWE of around 10 percent. The stake, which would amount to an investment of about €1.4 billion (€1.49 billion), would cement a new strategic partnership for the German utility — one that extends to the Persian Gulf.

The plans are still vague. An RWE spokesman confirmed the group had been approached a few months ago, and said: “We are currently reviewing various types of cooperation.” He declined to comment further.

The rumors have boosted RWE’s share price, which is now at €24.55, up 0.08 percent, in early trading.

Bloomberg first reported that Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan, owner of British football club Manchester City, was interested acquiring a stake in the German utility.

RWE’s chief executive, Peter Terium, could certainly use an injection of capital.

The company is deeply in debt: At the end of 2014, net debt amounted to €31 billion. At the same time, profits have been melting away.  In 2014 the operating profits  fell by 25 per cent to €4 billion.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.