DTEK wins auction to privatize 25% of Kyivenergo, as expected

12 December 2011
DTEK (DTEKUA) won Friday’s auction to privatize a 25% stake in Kyivenergo (KIEN UK), which will give DTEK ~65% of the company, according to our estimates. DTEK bid UAH 450.5 mln for the stake or UAH 18.2 mln (+4.2%) above the starting price. The implied deal price is UAH 16.63/share vs. the market price (last deal) of UAH 6.55/share. DTEK quickly announced plans to pay for the stake on December 12. DTEK estimated Kyivenergo’s investment needs at UAH 12-15 bln, and said it planned to invest about a billion each year starting in 2012. Alexander Paraschiy: The winner is no surprise, and DTEK’s prompt reaction with details of an investment program is a testament to this. DTEK’s specific investment priorities for Kyivenergo are not clear yet, but the plans do look positive for the company’s business outlook. We do not expect any market reaction to privatization news, unless DTEK offers a buyback to minority shareholders.