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SPF discusses Dniproenergo, Zakhidenergo privatization in 4Q10-1Q11

SPF discusses Dniproenergo, Zakhidenergo privatization in 4Q10-1Q11

18 June 2010

Alexandr Ryabchenko, head of the State Property Fund (SPF), revealed that the SPF is in agreement with the Ministry of Fuel and Energy regarding GenCos privatization, Interfax reported yesterday. Ryabchenko said that the first candidate for the privatization to be announced in 4Q10 will be one of the two GenCos: Dniproenergo (UX: DNEN UK) or Zakhidenergo (UX: ZAEN UK). Yegor Samusenko: According to the law, privatization auction for GenCos is to take place 75 days after privatization announcement, which means we should expect the privatization some time in December 2010 – 1Q11. Both candidate companies are of primary interest to DTEK, Ukraine’s privately owned vertically integrated energy producer controlled by Rinat Akhmetov. We think there is a reasonable chance other bidders will appear for these GenCos as well, but note that interest from strategic investors will strongly depend on the progress with energy market reform. We expect positive reaction by the market. On the downside, we note that DNEN stock is largely illiquid and ZAEN is already the most expensive on the market among GenCos: EV/kW of USD 220 vs. average of USD 160.

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