NRG investment fund shares will sell at a price higher than planned. The New Russian Generation Ltd (NRG) investment fund has approved the range for placing its shares in an IPO at $9.05-11.15 per share. As a result, it may raise almost $300 million instead of the earlier expected $200 million. Analysts no longer recommend portfolio investors to put up their money in RAO UES shares and prefer shares of NRG-like funds to them. Yesterday, the NRG investment fund which consolidates the power industry assets of Prosperity Capital Management, a management company, announced the range for placing its shares at the LSE. Prosperity managing director Alexander Branis told Kommersant in late October that NRG intended to conduct an IPO before the end of the year (see Kommersant, October 23). He then estimated the investment fund's capitalisation at $1.6 billion and said that the holding to be placed would amount to at least 25 per cent of shares worth around $200 million. Yesterday, however, NRG announced the price range for placing its shares which will amount to $9.05-11.15 per share. The company estimates that the IPO amount will total $480-590 million, proceeding from the placing price. The number of shares to be placed is unknown. It is known only that 48 per cent of the issue are shares owned by existing holders and 52 per cent are new shares. NRG believes that this will allow the company to raise around $300 million. PCM was founded in 1996 and manages in excess of $4 billion worth of assets. Its key power industry assets which Alexander Branis says represent about 75 per cent of PCM's total portfolio include 19.1 per cent of shares of Territorial Generating Company No 4 (TGC-4), 18.5 per cent of TGC-6, 27 per cent of TGC-2, 13 per cent of Interregional Distribution Grid Company (IDGC) of the Centre, and 10 per cent of IDGC of the Centre and the Volga Area. Yesterday, Mr Branis specified that the placing range was established by the underwriting banks Goldman Sachs and Morgan Stanley in association with NRG itself. However, he refused to report any placing details. The NRG announcement says that the final placing price will be approved on November 15. Earlier, Mr Branis told Kommersant that the fund would like to raise funds to "spend them on additional share issues of existing TGCs, so its interest in them is not eroded, as well as on purchasing new shares of power companies." Besides, the fund intends to make arrangements with foreign energy companies "for partnership for joint participation in the privatisation of generating companies." The Alexander Branis fund has become the second investment fund which has scheduled placing its shares in the last six months. The EOS Russia fund owned by former Troika Dialog Investment Company employees Lauri Sillantaka and Sven Thorngren, as well as RAO UES of Russia Board of Directors member Seppo Remes already conducted a private placement of its shares in May. The fund placed $190 million worth of shares. The Halcyon Power Investment Company fund managed by David Hern, head of the RAO UES Strategy and Reform Committee, will conduct an IPO early next year (see Kommersant, November 1). Mr Hern intends to raise $300 million. Analysts believe that the NRG share placement range is adequate to the fund's assets. "A normal fund would be a basket of securities whereof the risk is controlled by the manager," says Otkrytie Financial Company analyst Vasiliy Sapozhnikov. "Meanwhile, Branis has offered including in this basket also a premium for control, which makes this fund an exception." Sovlink Investment Company analyst Yekaterina Tripoten notes that portfolio investors are now becoming increasingly less interested in purchasing RAO UES shares which used to be the most attractive asset for them. "RAO shares are currently purchased by those who would like to take part in its reorganisation, while it is not too interesting to Western portfolio investors," says she. "For the same reason, the closer reorganisation the lower will be RAO's liquidity." Mr Sapozhnikov confirms that too. "Since it controls lots of companies, RAO is not capable of generating additional benefits for minority shareholders," says he. "Meanwhile, Branis as the manager of a fund is directly interested in the growth of its assets and profitability." The analyst believes that the fund can create stable financial flows for its clients, which will "guarantee at least that their business is preserved." |
