Ukraine sells Donbasenergo stake at USD 55/kW

The State Property Fund (SPF) of Ukraine sold its 60.8% stake in Donbasenergo (DOEN UK) for UAH 719 mln, or 12% more than starting price at the August 21 tender. The tender winner is Energoinvest Holding, a company related to Ihor Humeniuk, the 23th richest Ukrainian, according to rankings by Forbes-Ukraine magazine. His other assets are a development company in Donetsk and coal miner Krasnolimanske.

Alexander Paraschiy: The deal-implied Donbasenergo’s P/Capacity is USD 55/kW, which is twice less than DTEK paid for Dniproenergo (DNEN UK) and Zakhidenergo (ZAEN UK) in 2012. Although the deal price, UAH 0.50/share, is a 100% premium to the market price of Donbasenergo at the Ukrainian Exchange, we do not expect any positive market reaction to the deal. There is also no mandatory bid opportunity for minority shareholders related to this deal.

We are slightly surprised that a businessman which has no assets in the energy sector bought the Donbasenergo stake. The coal miner that Humeniuk controls produces fat coal, which is more of an input for coke production and is not suitable for Donbasenergo power plants (which burn leancoal and anthracite). On the other hand, we have been noting that Donbasenergo will shift into real estate development with new construction and reconstruction projects worth UAH 9.32 bln (refer to our news on Donbasenergo projects from June 7). Therefore, it should come as no surprise that Donetsk’s biggest real estate developer (according to Forbes) acquired Donbasenergo.

At the same time, we do not rule out that the stake being resold to a strategic investor with experience in the energy sector.