Capital Group was EDP's second largest shareholder, holding almost 10% of the energy company’s shares but after today’s sell-off, the US fund's position has reduced to under 3%.
"I'm afraid a large shareholder, the second largest, is leaving the company. People like stability, they like that the rules of the game are maintained," said EDP’s Chief Executive, António Mexia.
"What we see today is basically the market reaction based on recent measures that affect stability," added the millionaire leader of privatised company who, true to form, blames the loss of Capital Group on the government.
In 2015, Capital Group held more than 15% of EDP’s shares but now it is number six in the shareholder list.
António Mexia is at war with the Portuguese state due to a sharp reduction in the free money taxpayers have been handing over to EDP each year, under the deliberately complex CMEC scheme.
EDP was notified last week that it can expect far lower payments under the Contractual Balance Maintenance (CMEC) regime. EDP is disputing the figures with the Government but now that the public knows that is has been paying high electricity costs under a scheme that serves only to boost EDP’s profits, the government will get tougher, not slacker.
As a result, Capital Group’s decision to reduce its stake reflects the reality that EDP’s profits will go from a predicted €800 million this year, to between €500 million and €600 million due to government moves to reduce electricity prices for consumers.
António Mexia admits that 2018 will be the first year since EDP was sold off by the State, that it operations in Portugal will make a loss, the overall EDP Group being bolstered by overseas profits.
Mexia has overseen a collapse in the value of the company, down €600 since he issued a profit warning last Thursday, caused by the CMEC payment reduction.
In terms of stock market capitalisation, EDP remains huge with a current market value of €11.34 billion.
