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UPDATE 2-Renewables firm Neoen's big expansion plan turns off investors

(Recasts with shares, detail from call, background)

March 11 (Reuters) - France’s Neoen set out plans to issue equity to fund expansion and warned on future earnings on Thursday, sending the renewable energy producer’s shares down by more than 8%.

The company, which owns Australia’s Victorian Big Battery project, aims to invest 5.3 billion euros ($6.3 billion) to more than double its capacity to 10 gigawatts in operation or under construction by the end of 2025.

On its capital markets day, Neoen outlined plans to gradually double growth to two gigawatts per year, mainly in countries where it already operates.

Funding the expansion will require a capital increase of up to 1.2 billion euros, though less if it sells stakes in some projects, it said.

“We are talking about selling total or majority capacity, letting someone else put their flag on one of our assets, but we intend to stay involved,” CEO Xavier Barbaro told analysts on a call.

Barbaro also warned that profit in 2021 and 2022 might increase more slowly due to the impact of the coronavirus.

Debt-funded renewables firms like Neoen have faced rising interest rates as well as construction delays under global lockdowns and pressure on electricity pricing.

“Renewables were at all-time high at the end of 2020, most of the time at unjustified valuation levels,” said Stifel analyst Martin Tessier prior to the announcement, adding that Neoen’s market value had at its peak far outstripped that of its portfolio.

He added that some U.S. investors were selling their positions in European firms to reallocate in the United States, anticipating more climate-friendly funding from stimulus following the November election of President Joe Biden. .

Neoen’s stock was down 8.2% at 1305 GMT, bringing its share price back to pre-November levels.

The group’s market capitalisation has almost tripled since it debuted on the Euronext in October 2018, becoming the first French unicorn in the renewable energy field.

($1 = 0.8389 euros)

Reporting by Sarah Morland in Gdansk; editing by Lincoln Feast and Jason Neely

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