VS Energy privatizes 45% of Chernivtsioblenergo

VS Energy was declared the winner of yesterday’s privatization auction for 45% in Chernivstioblenergo (CHEN UK). Competition from another participant (Energy Standard group), pushed the price up from the starting bid of UAH 65.45 mln to UAH 70.00 mln. Prior to the deal, VS Energy already controlled a 22% stake in Chernivstioblenergo.

Alexander Paraschiy: As we expected a minority shareholder in Chernivtsioblenergo won the auction. Following the auction, VS Energy will control five of 27 Ukrainian regional distribution companies. The deal price implies roughly 4x EV/EBITDA 2011, and is in line with market quotes of Russian inter-regional distribution companies (traded at 3.0x- 4.2x). The final bid implies a price of UAH 2.74 per share, a 71% premium to the market (last deal). Given the extremely low liquidity of Chernivtsioblenergo shares, we do not expect a market reaction to the news.