RWE

Company Update:
RWE is acquiring an additional indirect 35% stake in Amprion for EUR3.6bn. RWE already owns an indirect 20% through a joint venture with Apollo Global Management, meaning this transaction will elevate its total indirect ownership to 55% (taking majority control).

The transaction is valued at a highly disciplined 1.07x of Amprion's 2027 Regulated Asset Base (RAB) and according to management will be EPS accretive from day 1. 

The deal is financed through a EUR4bn capital increase : 74.4m new shares were created and sold at EUR54 per share. Qatar Investment Authority (QIA) and Norway's Norges Bank committed to buying approximately €1 billion of the placement (around 25% of the total capital raise).

2031 EPS Guidance: Upgraded to EUR4.55  (vs EUR4.4 previously ). By 2031, more than 75% of RWE's adjusted EPS will come from contracted or highly stable regulated earnings.

RWE confirmed its fiscal 2026 dividend target of EUR1.32 and its commitment to a 10% annual dividend growth rate. Furthermore, its separate €35 billion core investment plan for green generation and battery storage remains completely untouched.

Amprion's own massive EUR42bn capex plan and debt will not be consolidated onto RWE's balance sheet. Amprion will continue to secure the vast majority of its capital needs independently via its own debt issuance and hybrid bonds. Note, however, that as a 55% (indirect) shareholder, RWE  will be responsible for its proportional share of any future equity injections needed to maintain Amprion’s required 40% regulatory equity ratio.

Valuation and price paid: the key surprise, in our view, is valuation. The EUR3.6bn purchase price implies 1.07x Amprion’s 2027 regulated asset base (RAB), a level that appears relatively undemanding versus listed peers. By comparison, E.ON currently trades at c.1.60x EV/RAB, while Elia trades at c.1.15x and Redeia, Terna and National Grid at roughly 1.30-1.40x.

That said, the valuation is broadly consistent with recent private market transactions in Germany. While cross-country comparisons remain imperfect given differences in regulatory frameworks and allowed returns, it is worth noting that TenneT Germany raised €9.5bn of equity in September 2025 from APG, NBIM and GIC at an implied valuation of approximately 1.09x EV/RAB — a pricing level that had already struck us as relatively conservative at the time.

Listed European network operators continue to trade at a premium to the valuations that corporates and institutional investors appear willing to pay in private transactions. We have already seen evidence of this disconnect in the strong share price reactions following recent network acquisitions by Engie and Iberdrola in the UK.

We will update our model accordingly. Overall, we expect a positive market reaction to today’s announcement despite the associated equity issuance. We maintain our Reduce recommendation on RWE.

Expert Opinion:
The price paid is a good surprise at 1.07x RAB, which is lower than prices recorded in recent acquisitions, especially for this kind of transmission assets and peers.  However, one can also read this as a sign that the current valuation for transmission assets is now too expensive.

The stock is likely to open down marginally following the cap increase priced at EUR54. While we will increase our estimates, the impact should not be meaningful enough to trigger a substantial change in the target price. Furthermore, the group's risk profile is changing as it is now the de facto largest shareholder of Amprion with massive capex commitment. 

So in all, a disciplined deal which embarks more transmission while leaving the generation plan unchanged makes the company  riskier in our opinion. We wouldn't chase the stock here. 


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