Shares of the company have grown in price by 11% The Federal Antimonopoly Service (FAS) has granted Italy's Enel permission to buy 70% of shares of OJSC Fifth Generating Company of the Wholesale Power Market (WGC-5). Thus, since it already possesses almost 30% of WGC-5 shares, Enel will be able to become the sole owner of the generating company. Investors have got inspired by Enel's intentions: WGC-5 share quotations grew 11% on Friday. Dow Jones news agency on Friday quoted Enel's head Fulvio Conti as saying that the company is waiting for the answer from Russian regulatory authorities concerning the increase of its interest in WGC-5. A FAS spokeswoman, Irina Romannikova, told Kommersant that on 16 August that the Italians already obtained a positive opinion of the agency on the acquisition of 70.00028% of WGC-5 shares. This means that Enel has an opportunity to become the owner of 100% of the company in which it has already obtained a little fewer than 30% of shares. Enel filed its application on 6 July, according to Ms Romannikova. The company can buy additional shareholdings from the government or minority shareholders of WGC-5. However, both Enel and the Federal Agency for Federal Property Management (Rosimushchestvo) which in September will obtain 26% of WGC-5 shares on Friday declined to say whether the sale of the securities is already negotiated and in what form it may take place: directly to the Italian company or by auction. Enel became a co-owner of WGC-5 in June, having purchased 25% of the company's shares from RAO UES of Russia (see Kommersant of 7 June). The Italians paid the highest price over the entire history of the placement of additional share issues of generating companies: $0.17 per share or $686 per kilowatt of the installed capacity. The price of the entire stock amounted to $1.5 billion, which was 15.6% more expensive than its market value. Then Enel rose its WGC-5 interest to 29.9% of shares, purchasing the remaining 4.9% in the market for $281 million ($0.16 per share). As far back as in June, Stepan Zvegintsov, head of the Enel representative office in Russia, announced the company's intentions to increase its interest in WGC-5, but he did not specify the sources of the securities. WGC-5 is one of the largest generating companies in Russia. The installed capacity of its state district power plants (GRES) in Konakovo, Reftinskii, Nevinnomyssk, and Sredneuralsk exceeds 8,700 MW. In October 2006, the company carried out an additional share issue (14.4% of the increased capital), which enabled RAO UES to earn $459 million. No information was disclosed on the resulting exact allocation of the securities between investors. Only Finland's Fortum and the European Bank for Reconstruction and Development specified their stocks: 1.1% for each. Shares were also purchased by Vnesheconombank, Gazprombank, and NOVATEK, according to unofficial information. Another 50% of shares belong to RAO UES and 29.9% to Enel. Analysts think that Enel can increase its WGC-5 interest first of all by purchasing the government-owned stock in the generating company. The latter will be spun off RAO UES as soon as 4 September, along with Territorial Generating Company No 5 (TGC-5). The divestment scheme provides for the division of RAO UES's current interest (50%) into two portions. The government represented by Rosimushchestvo will obtain 26% of shares. Twenty-four per cent will be distributed between RAO UES minority shareholders on a pro-rata basis. Also, Enel may raise its stock in the company by issuing an offer which it will make to WGC-5 minority shareholders as soon as it becomes the owner of over 30% of the company's shares. After on Friday the FAS announced granting Enel permission to buy in shares of WGC-5, the price of its securities on the Moscow Interbank Currency Exchange (MICEX) grew by 11% at once. "Everyone is buying in the securities due to waiting for Enel to make an offer," Uralsib Investment Company analyst Matvey Tayts explains growth of the shares. "The share price is quite low currently, 3.95 roubles (a little over $0.15 - Kommersant), while the offer is most likely to be made at the price Enel paid at the auction, i.e. 4.43 roubles (a little over $0.17 - Kommersant)." "The offer is most likely to be made when WGC-5 has already been spun off from RAO UES," thinks Troika Dialog Investment Company analyst Igor Vasiliev. Analysts are confident that the government stock will be sold only by a public auction and it is unlikely to take place soon. "A special order of the government is required to sell state-owned property which must be included in the privatisation plan," reminds Dmitry Bulgakov, a Deutsche UFG analyst. "Therefore, a public auction is most probable." The analyst estimates the current price of the state-owned interest in WGC-5 at $1.4 billion. Mr Tayts estimates it a little lower, at $1.35 billion. Mr Bulgakov believes that Enel will not buy out 100% of shares and that it filed such an application just in case, not to bother to obtain additional FAS permission should there arise an opportunity to increase its shareholding. |
