SPF adds Mykolaivoblenergo and Khmelnitskoblenergo to privatization list

Ukraine’s State Property Fund expanded the list of electricity distribution companies to be privatized this year to Mykolaivoblenergo (UX: MOEN UK) and Khmelnitskoblenergo (UX: HMON UK). The government holds 70% stakes in both companies. As with other electricity companies offered for privatization, the government intends to retain a 25% stake. Yegor Samusenko: Both companies are of potentially of interest to VS Energy group, in our view. VS Energy is one of the largest owners of electricity distribution businesses in Ukraine, controlling six Oblenergos. The group is believed to be a minority shareholder in both Mykolaivoblenergo and Khmelnitskoblenergo, and thus, the only potential bidder who would be able to increase its stake to a controlling block after privatization. We do not expect a stock market reaction to the news given the illiquidity of both shares, but we note there could be a put option for minorities to sell their stakes to a new majority shareholder, if the latter accumulates a controlling stake as a result of privatization.