SPF to sell 50% in Dniprooblenergo on April 17

The State Property Fund of Ukraine said yesterday it planned to sell a 50% stake in Dniprooblenergo (DNON UK), Ukraine’s largest power distribution company (18% of power distributed by regional distribution companies), on April 17. The starting price for the stake is UAH 600 mln (implying P/E 2011 of 28x). Qualified bidders are required to have supplied power equal to at least 30% of Dnirpooblenergo’s production in each of the last three years.

Alexander Paraschiy: There are only three local companies that can qualify for the tender: DTEK’s Servis-Invest, Energy Standard’s LEO and VS Energy International. The key candidates to purchase the stake, in our view, are DTEK and Energy Standard. While the latter already controls indirectly a 16% stake in the target company, we do not rule out that DTEK will be the winner. Though a near-controlling stake in the company is being sold, we do not expect any international interest in the auction.