Privat May Consider Sale of Ukrnafta

In an interview with a local weekly, Privat Group co-owner Hennadiy Bogolyubov said the group may sell Ukrnafta (UNAF: U/R), while Dniproazot (DNAZ: SELL) is not being considered for sale any longer. Vladimir Nesterenko: We share Bogolyubov’s view that the structure of Ukrnafta’s ownership is the major obstacle for its efficient development. While the state is likely to maintain the status quo, Privat is open to selling out. However, the deal would hardly fuel stock price appreciation. A strategic investor would require a discount for a stake below 50%. An IPO is also unlikely to get high valuations: the oil and gas IPO rally over the last two years made the market rather demanding for fundamentals, which are not particularly favorable in Ukrnafta’s case. Look for a report on Ukrnafta later today. The announcement that the group is not selling Dniproazot anymore is not surprising. This summer the deal was postponed for an undefined time, which we considered to be a signal that the price was set too high. Although Dniproazot’s float was almost completely bought out by Privat over the last year, we keep our SELL recommendation for those still keeping the stock.