RosUkrEnergo Reportedly Targets GasCos.

According to the newspaper Kommersant, RosUkrEnergo is proposing to buy large stakes in seven Ukrainian gas distribution companies (GasCos) from the Ukrainian oil and gas holding West Oil Group, controlled by former MP Igor Yeremeyev. According to Kommersant, Bank Aval conducted a valuation of the stakes for RUE valuing them at a total of $73.5m (see table). Kommersant wrote that the valuation has been approved by the Gazprom official who co-manages RUE, which allows the deal to go ahead. Alexander Paraschiy: Assuming the Kommersant report is correct, Aval’s valuation gives on average a 26% premium to our valuations (see our GasCos report of Aug. 22). In our opinion, the premiums are related to control and to the fact that the potential buyer less conservatively estimates the risks associated with GasCos’ indebtedness. We think the reported valuation of Chernivtsygaz is too high, as the company only operates a gas network, and is not involved in the gas supply business, and we believe the reported valuation of Rivnegaz was too low.