EuroBusinessMedia: Poweo, France's first independent gas and electricity utility, is planning to raise about 150 million euros through a new share issue. Charles Beigbeder welcome. You are the founder and CEO of Poweo. For investors watching today who are not necessarily familiar with your company yet, what are the key points to know about Poweo in the context of the French electricity market?
CB: Poweo is the leading independent energy operator in France. We are the first new entrant, we are in fact the only alternative to EDF and to Gaz de France for the opening of the residential market, which is 1st of July. We were founded in 2002. At the moment we have 80,000 commercial customers and we're targeting 100,000 new customers in 2007. In terms of revenues, we generated 244 million euros in revenues last year and we aim to quadruple that by 2010.
EBM: Your business model has changed radically since the IPO a few years ago, when you started out as a reseller of electricity for the SME and retail market, but now you're becoming a full fledged, independent electrical and gas utility with your own production capacity. Why the change in the business model?
CB: Well the barrel of oil tripled in 2004, so it gave us an opportunity to become a vertically integrated gas and electricity operator. We decided to build new capacities, new power generation capacities - up to 3,400 mega watts, of which 600 in renewables. In order to secure that capacity we decided to secure a strategic partnership with Verbund, which is the national operator in Austria, which took 25% of our capital, and with which we set up a joint venture dedicated to power generation, 60% owned by Poweo and 40% by Verbund. And we now have our first power plant being built in the North of France, it's a 400 megawatt combined cycle gas turbine. In order to secure the gas sourcing of all those future plants, we have decided to build a new LNG terminal in Le Havre.
EBM: You will need to invest more than 2 billion euros in the coming years to build your own electrical power plants. Today your market cap stands at about 300 million euros and you plan to raise an additional 150 million euros, which is still short of the 2 billion euros financing you need. What can you tell us about the use of the proceeds from the new share issue and, more generally, about how you plan to finance your capex?
CB: We have an industrial plan that amounts to 2 billion euros. 70% of that plan can be financed through project finance. That leads us to 600 million euros in equity need. We will assume 60% of that need, which is 360 million. Then we have our existing cash. We have the possibility to put in place a senior debt financing. We have the 150 million euro proceeds from the capital increase and then we have also the cash flow from the plants when they are put into operation starting 2009.
EBM: How would you describe your position in the competitive environment in France as you are a small independent player facing such giants as EDF and Suez. What is the nature of your relationship with EDF which is both a competitor and a partner?
CB: At the moment you have EDF and Gaz de France which are getting the whole market, Suez which is focusing on power generation and large customers and Poweo is the sole alternative on the mass market. EDF has ambitious expansion plans in Europe. They want to become the number one worldwide leader in Electricity. Fine. So they need to develop in other European countries and therefore they really need the French market to really open to competition. So in a way we are a kind of ally to EDF. In order to develop we are building the power plants and we are exchanging a portion of their capacity against an access to the nuclear capacity of EDF, which gives us a power generation mix which is favourable, which is competitive and which allows us to beat the electricity tariff fixed by the government.
EBM: So in the final analysis EDF is it a competitor or a partner?
CB: EDF obviously is a competitor. But in a way we help them to develop abroad by opening the French market.
EBM: As you mention on July 1st France will finish opening up the electricity market including the much awaited retail market. How good has your penetration of the SME market been up until now, and how much market share can you realistically hope to gain in the French retail market tomorrow?
CB: We have 80,000 customers, which is 3% of the commercial market and we have designed a very innovative package for the retail market. We really want to change their relationship with energy, to help them to better consume. At the moment there is considerable waste in the way they withdraw their energy, 40% in the residential segment. So we have designed specific tools to help them understand how they withdraw energy and of course we propose a price advantage for the price of electricity, which is 10% below the regulated tariff in the fixed package we are proposing. The target we have is to gain 100,000 new customers this year and to reach 4% market share in 2010, which will allow us to have more than 1 million customers.
EBM: Charles Beigbeder, founder and CEO of Poweo, thank you very much.
CB: Thank you.
