Ukraine sets starting price for Centrenergo 78% stake at UAH 6 bln

Ukraine’s Cabinet of Ministers approved on Oct. 3 the
starting price of a 78.3% stake in power generator Centrenergo (CEEN UK) at UAH
5.98 bln, State Property Fund Head Vitaliy Trubarov reported on Oct. 3. The
fund and the Economy Ministry is going to complete preparation of privatization
conditions in three days, he said, and will make an official announcement of the
company’s privatization in mid-October. The fund is planning Centrenergo’s
privatization auction in late November.

Alexander Paraschiy: The
announced starting price implies total EV of about USD 260 mln, EV/Capacity of
USD 55 per kW and EV/Output’17 of USD 41/MWh. In terms of EV/Output, most of
the previous privatization tenders in Ukraine were closed at a lower price (USD
10-33 per MWh), except for the sale of Zakhidenergo’s 45% stake in 2012 (at USD
45/MWh). In terms of EV/Capacity, the previous tenders, on average, brought a
higher multiple: USD 73/kW. Therefore, at first glance, the starting price of
Centrenergo looks feasible for potential investors.

If the deal is closed this year, the State Property
Fund may generate its highest annual privatization revenue for the last six
years. At this stage, we estimate the probability of a successful sale at 50%.