By Geert De Clercq
ESTORIL, Portugal (Reuters) - State-owned Estonian utility Eesti Energia plans to list up to 49 percent of its Enefit Renewables unit early next year in an initial public offering (IPO) that could raise up to 500 million euros ($557.25 million), Chief Executive Hando Sutter said.
The IPO is planned for the first half of next year, with the timing to be detailed in August, he said.
The company is looking to raise "a few 100 million euros", probably less than half a billion euros, Sutter told Reuters on the sidelines of the Eurelectric utility conference.
The listing, which was agreed in the new Estonian government's coalition agreement in November, could make Enefit Renewables the biggest listed company on the Tallinn exchange and will be the biggest IPO in the Baltics in years.
Shipping group Tallink is the biggest company on the Baltic stock index with a market value of about 620 million euros.
"(Enefit Renewables) is a little bit too big for Tallinn, it might have made sense to list it somewhere else, but the government wanted to make the domestic stock exchange more active," Sutter said.
Eesti Energia is Estonia's main electricity retailer, with a market share of about 60 percent. It also has a 20 percent market share in Latvia and about 10 percent in Lithuania.
Sutter said the Estonian government had also considered listing the entire firm but decided to start with the renewables unit as that is where most of the company's capital spending will go.
Sutter said the lion's share of the IPO proceeds, some 180 million euros, would go towards the development of a new 140 megawatt (MW) wind park in Tootsi, southwest Estonia. A tender for the park's turbines, with probable capacity of 3 MW each, has been launched.
Eesti Energia also has other renewable energy projects, in wind and biomass.
The tiny Baltic country has total wind capacity of 300 MW, which accounts for about 8 percent of total power consumption.
About 85 percent of the country's electricity is generated from oil shale, which Eesti Energia mines and burns in its own power stations.
Eesti Energia - which operates abroad under the Enefit brand name - has also just acquired a gas and power license in Poland, where it has set up an office and hired a team to launch power retailing.
Eesti Energia is one of the most digitalized utilities in Europe, with 95 percent of its 650,000 customers on paperless digital subscriptions.
Forty percent of the company's customers are on so-called dynamic tariffs linked directly to wholesale power prices and many have apps on their phone that allow them to take advantage of low prices to charge electric vehicles or heat up water boilers.
Sutter said the company wanted to boost its digital retail offering in neighboring countries.
($1 = 0.8973 euros)
(Additional reporting by David Mardiste in Tallinn and Nerijus Adomaitis in Oslo; writing by Geert De Clercq; editing by Susan Thomas)