Iren Group has always carried out an intense activity aimed at reinforcing the relationship of trust with its shareholders and at increasing the interest and knowledge of Italian and foreign analysts and investors.
The market’s strong interest in the Group is confirmed by the intensification of relations and opportunities for contact with analysts and the Group’s positive performance, supported by the streamlining process in recent years and the presentation of the Business Plan to 2025. In addition to this, there is the positive effect of the optimisation of Iren’s financial profile, through greater recourse to the bond market, compared to the banking channel, confirmed by the issue in 2020 of a bond for 500 million Euro and the Group’s fourth Green Bond for 300 million Euro, which contributes to strengthening the strategic vision oriented towards sustainability.
In 2020, 7 brokers were active on the stock with periodic reports: Banca Akros, Banca IMI, Equita, Intermonte, KeplerCheuvreux, Main First and Mediobanca. In December 2020, a research contract was signed with Exane, a globally significant broker.
Relationships with investors have continued as in previous years. The increased interest shown by investors towards the Group has required a greater communication intensity. As in previous years, the roadshow, organised from time to time by different brokers, was the main tool for introducing the Group to Italian and foreign institutional investors, both in terms of equity and credit. In 2020, 20 virtual roadshows and conferences were held in the world’s major financial markets (London, Paris, Geneva, Brussels, Luxembourg and Frankfurt). An important innovation compared to previous years was the participation in the Frankfurt conference. During the year, meetings were held with 120 investment funds, for a total of 170 fund managers or analysts. The direct day-to-day contact with the managers of institutional funds and financial analysts that oversee the bond is of particular significance.
In addition to the roadshows, the Group has maintained constant communication with the market using different channels, including quarterly conference calls for the presentation of the results for the period. Furthermore, on 30 September 2020, a live streaming investor day was organised to present the Business Plan to 2025 to the financial community.
Institutional investors are showing increasing interest in environmental, social and governance topics (ESG). A corporate governance approach able to make the Group efficient, dynamic and stable is a decisive factor in the investment choices of the main players in financial markets. Any economic and financial performance, in fact, must be assessed based on its repeatability or potential for improvement over time and this can only happen thanks to rules of corporate governance in line with best practices. In 2020, Iren identified a number of areas for improvement and launched a project to make the information required by investors even more available. In addition, contacts with ESG investors continued, structuring a transparent and timely dialogue on these matters as well.
Iren share performance
In 2020, the FTSE Italia All Share (the main index of Borsa Italiana) fell by 5.6%, mainly due to the impacts of the Covid-19 pandemic. The first part of the year was characterised by an unfavourable energy scenario, with low commodity prices, which deteriorated further following the health emergency, the resulting lockdown and expectations of a slow economic recovery, despite the recovery plans approved by central banks and governments. This difficult economic situation has affected share price performance in general, which has been affected by negative market expectations from incurring extra costs related to the Covid-19 emergency, lower demand for products and services and a slowdown in investments. In this context, multi-utilities underperformed the FTSE All Share index due to investors’ portfolio choices favouring other sectors such as technology. At 31 December 2020, the price of Iren stock stood at 2.126 Euro per share, down 23% compared to the price at the beginning of the year, with average volumes traded during the period amounting to approximately 2.12 million units per day. The average price was 2.301 Euro per share and reached an all-time high (3.106 Euro per share) on 19 February, bringing the Group’s market capitalisation to over 4 billion Euro; the lowest price of the year (1.770 Euro per share) was recorded on 18 March.
The Iren share is listed on Borsa Italiana (the Italian Stock Exchange in Milan) and is included in the following financial indexes:
- FTSE Italia All Share, the index that includes all the shares listed on the electronic market of Borsa Italiana, with the exception of micro-capitalised companies;
- FTSE Italia Mid Cap, part of the FTSE Italia All Share that includes the shares of medium-capitalised companies;
- FTSE All Share Capped, which includes all of the companies included on the FTSE MIB, FTSE Italia Mid Cap and FTSE Italia Small Cap indices, the shares of which are weighted;
- FTSE Italia Servizi Pubblici, the sector index that includes the shares of companies that operate within public services.
The Group is present in several stock indices defined as sustainable.
There were no instances of fines or penalties for failure to comply with the obligatory regulations and laws for shareholders.
Volumes and price trend of Iren Stock
Volumes traded (millions of share)
Relations with financial backers
The Group has relations with leading Italian and international credit institutions and has access to the capital market in order to research the most suitable forms of financing for its needs and the best market conditions, implementing a management model focused on the resources and financial risk management with the objective of financial optimisation for all of the companies of the Group.
The sustainability of the financial profile has always been one of the key strategic elements for the Group. On 20 October 2020, the Fitch agency confirmed for Iren and its senior unsecured issues the BBB rating, with a stable outlook. The assessment is based mainly on the Business Plan to 2025 which, in continuity with previous years, confirms the prevalence of regulated and semi-regulated activities (over 70% of EBITDA at the end of the Plan). Fitch rates the Group as well positioned within its benchmark indices, with limited impact from the negative market effects of the Covid-19 emergency. In support of the Group’s liquidity profile and rating level, as of 31 December 2020, Iren has 300 million Euro of subscribed and available but undrawn medium/long-term loan facilities and 150 million Euro of committed credit lines of the sustainability-linked revolving credit facility (RCF), in addition to current cash and cash equivalents.
In particular, the new loans were granted to support investment plans and, confirming the trust held by the financial system in relation to the Group’s development projects, allow for the suitable balance between financial exposure in the short and long term to be maintained.
As regards capital market transactions relating to the Euro Medium Term Notes (EMTN) Programme of 4 billion Euro at the end of June 2020, on 23 June, Iren carried out a new bond issue for 500 million Euro with an annual gross coupon of 1% and maturity on 1 July 2030, while on 10 December 2020, the fourth bond issue in Green Bond format was completed for 300 million Euro. No additional requirements from Socially Responsible Investors (SRIs) have been identified concerning maintaining the Sustainable Financing Framework commitments.
There were no instances of fines or penalties for failure to comply with the obligatory regulations and laws for financial backers.
Iren Bonds in circulation at 31/12/2020
|Bond||ISIN Code||Issue Quantity /€/000)||Amount in circulation (€/000)||Ann. Coupon (%)||Maturity at issue (Years)||Maturity dates||Issue Price (%)||Rating|
|Green Bond 2031||XS2275029085||300,000||300,000||0.25%||10||17/01/2031||99.030||BBB|
|Green Bond 2029||XS2065601937||500,000||500,000||0.88%||10||14/10/2029||99.345||BBB|
|Green Bond 2025||XS1881533563||500,000||500,000||1.95%||7||19/09/2025||99.129||BBB|
|Green Bond 2027||XS1704789590||500,000||500,000||1.50%||10||24/10/2027||98.356||BBB|
The issuance of the fourth Green Bond (Fitch BBB rating) (10 December 2020 with maturity 17 January 2031) for 300 million Euro, reinforces the path undertaken in the field of sustainable finance by Iren, which confirms its position as the first Italian local utility by number of green issues: a total value of 1.8 billion Euro, representing 54% of the Group’s bond portfolio. The operation – in addition to the Green Bonds placed in 2017, 2018 and 2019 – registered a very positive response, with memberships over 2 times the amount offered, which confirms the strong appreciation of investors towards Iren’s credit and Sustainable Financing framework. Green investors have been estimated at about 70% of the amount allocated, up from previous issues, with high quality and broad diversification. The fourth Green Bond was allocated to the refinancing of 20 projects, falling into four categories: energy efficiency, renewable sources, waste management efficiency and recycling, wastewater treatment. In particular, these are projects focused on plastic recovery, the development of district heating and the improvement of treatment processes, which give concrete form to the concept of a multicircle economy that characterises Iren’s strategy to 2025, in line with the goals of the UN 2030 Agenda (Sustainable Development Goals).
The fourth Green Bond issued has a minimum denomination of 100,000 Euro, pay a gross annual coupon of 0.25% and was placed at an issue price of 99.030 Euro. The effective gross rate of return at maturity is 0.348%, corresponding to a yield of 64 basis points above the 10-year mid-swap rate. The bonds were listed on the regulated market of the Irish Stock Exchange and on the ExtraMOT PRO market of Borsa Italiana in the green instruments segment. This new issue confirmed the Group’s strategy of integrating sustainability into its development plans with an increasingly structured approach and adopting procedures dedicated to “green” financial instruments to ensure the necessary transparency for investors.
Iren has also identified additional innovative instruments of sustainable finance such as:
- green energy loan that led, in October 2020, to the finalisation of a new loan facility with the European Investment Bank (EIB) for 100 million Euro, with a 16-year duration, to support the programme (2021-2025) of development and efficiency of the district heating network in the Turin area for a total amount of 197 million Euro. Such projects that qualify as “efficient district heating and cooling” under Directive 2012/27/EU are covered by the EIB’s new energy lending policy;
- signing of a loan agreement for 80 million Euro with CEB (Council of Europe Development Bank) to support an investment plan in the water infrastructure of the provinces of Genoa and Parma, providing an efficient and sustainable service in compliance with European directives. Promoting sustainable water resource management is closely aligned with CEB’s strategic priorities pursuing the Sustainable Development Goals.
Allocation of funds
For the Green Bond issued on 10 December 2020 (GB4), the funds were allocated to 20 individual projects identified by Iren according to a correspondence with precise environmental criteria ensured by an external certification body. The use of liquid funds allocated to the refinancing/financing of the selected projects is monitored from the date the Green Bond was issued and until the complete allocation of the net amount of 297,090,000 Euro, within the maximum period of 24 months. 57% of the net proceeds (168,081,288 Euro) was used for refinancing and/or financing investments covered by previous bank lines and bonds. In comparison, the remaining 43% (129,008,712 Euro) will be allocated within 24 months of issue and is included in the liquidity balance as of 31 December 2020, with an allocation constraint to the refunding/funding of eligible projects.
For the Green Bond issued on 14 October 2019 (GB3), 450,408,230 Euro has been allocated as at 31 December 2020, representing 91% of the net proceeds, while the remaining part, amounting to 46,316,770 Euro, is included in the liquidity balance as of 31 December 2020 and will also be allocated according to the limitations in refunding/funding of eligible projects.
Investments concerning the Green Bonds issued in 2017 and 2018 (GB1 and GB2) were also confirmed as of 31 December 2020.
Allocation of income from Green Bonds as at 31/12/2020 (1)
|Green Bond 2031 (GB4)||Green Bond 2029 (GB3)||Green Bond 2025 (GB2)||Green Bond 2027 (GB1)|
|Project categories||Investments (Euro)||Projects (no.)||Investments (Euro)||Projects (no.)||Investments (Euro)||Projects (no.)||Investments (Euro)||Projects (no.)|
|Waste management efficiency and recycling||47,450,547||6||42,617,124||3||7,265,347||1||42,123,504||1|
|Water service efficiency||-||-||4,677,908||1||-||-||-||-|
|Residual funds to be allocated||11,100,000|
(1) The 71 projects indicated in the table include projects common to all four Green Bonds for different years, excluding these projects the total is 44.
The positive environmental impacts generated by the projects funded by the four Green Bonds are outlined by the main indicators shown in the table below.
More information on the Green Bonds and funded projects is available in the relevant section of the gruppoiren.it website.
|Project category and main indicators||u.m.||2020||2019||2018||2017|
|Electricity produced from renewables||MWh||0||848||75||45|
|Primary energy saved||MWh||1,532,645||1,808,508||2,200,496||2,281,239|
|CO2 emissions avoided from non-fossil sources||t||492,287||616,258||636,478||724,744|
|Thermal energy produced||MWh||1,761,915||1,672,602||1,777,454||1,857,633|
|Electricity input to the grid||MWh||3,695,140||3,987,352||4,002,396||4,420,350|
|Network leaks (electricity)||MWh||107,705||168,581||166,866||172,820|
|Electricity and gas smart meters installed||no.||1,385,339||1,330,716||1,188,480||966,569|
|Primary energy saved||MWh||2,101,596||2,827,848||3,254,066||3,663,699|
|Electricity produced from renewables||MWh||765,174||777,269||904,438||761,335|
|Thermal energy distributed||MWh||2,852,617||2,779,773||2,816,307||2,956,143|
|CO2 emissions avoided from non-fossil sources||t||1,074,207||1,320,889||1,371,073||1,581,848|
|Waste management efficiency and recycling|
|Refuse Derived Fuel (RDF)||t||9,429||16,523||2,585||7,886|
|Sorted waste collected||t||825,674||813,804||788,313||711,910|
|Unsorted waste treated||t||371,735||415,905||445,411||464,837|
|Door-to-door collection services – residents served||no.||1,656,415||1,590,536||1,473,268||1,391,087|
|Plastic sent for recovery||t||59,635||-||-||-|
|CO2 emissions avoided||t||102,162||-||-||-|
|Equivalent residents served (potential)||no.||627,656||526,528||510,650||290,650|
|Volumes of water for reuse/Volumes of treated water||%||31%||32%||30%||30%|
|Wastewater treatment plants||no.||1,310||1,293||1,278||1,122|
|Water service efficiency|
|Smart meters installed||no.||96,965||51,742||-||-|
|CO2 emissions avoided from non-fossil sources||t||1,091||789||52||-|
ESG indices and ratings
Iren Group’s decision to place sustainability at the centre of its development is confirmed in its Business Plan to 2025: circular economy, water resources, resilient cities, decarbonisation and people will be at the heart of the Group’s agenda, which will invest more than 2.2 billion Euro in sustainability by 2025, to achieve its commitments in line with the United Nations 2030 goals (SDGs – Sustainable Development Goals). This is a tangible commitment that confirms the desire to merge the Group’s development with that of the communities, local areas and the environment.
ESG indices include company shares with strong sustainability profiles, with the aim of providing socially responsible investors with a method of evaluation based on the premise that companies with sustainable approaches to environmental, social and governance issues outperform their competitors in the long term. Also in 2020, Iren was reported in the STOXX and Bloomberg indices.
The ESG ratings are considered a strategic tool to support investors and identify risks and opportunities regarding sustainability within their investment portfolio, contributing to the development of active and passive sustainable investment strategies. Iren has been evaluated by various rating agencies.
CDP Climate Change 2020 analyses performance data for reducing emissions, mitigating climate change and developing a low-carbon economy. Iren achieves the highest A-level recognition for 2020, plus Supplier Engagement Leader Rating (SER) obtained for the involvement of its suppliers in the fight against climate change.
The Oekom Corporate Responsibility Rating comprehensively assesses businesses’ sustainability performance and future profitability and identifies the most successful businesses. In the Corporate Responsibility Rating (April 2018), Iren Group was awarded Prime status.
MSCI ESG Ratings gave Iren an A rating, against a maximum of AAA.
In the Sustainalytics ESG Risk Rating – which analyses the relevance of environmental, social and governance issues and how the company manages the risks arising from these issues – the Group earned 29.7.
Furthermore, Iren is rated in the ESG Rating of Vigeo Eiris, the leading social, environmental and governance rating agency in Europe, and the Equileap rating for gender equality.