Russian hydroelectric power generator, RusHydro, has approved a price of 1.65 roubles per share for a 147 billion rouble additional share issue.
RusHydro will issue 89 billion shares with a par value of 1 rouble per share. With an effective 22% premium to market and the states majority 58% stake in the energy producer this is likely to mean an effective 18% capital raising worth an estimated 85 billion roubles.
RusHydro say it will place a valuation on shares of RAO Energy Systems of East, DEK, Yakutskenergo, and Sakhalin Energy Company, as payment for new issue shares in forthcoming board meetings.
UniCredit analyst, Peter Chankin, noting that the state should contribute its 40% stake in Irkutskenergo, which will be priced at a 12% premium to the market, says the markets are likely to respond positively to the news.
“We consider the 22% premium valuation for RusHydro shares to be positive, as it exceeds the 12% premium for the 40% stake in Irkutskenergo. In ruble terms, we see roughly 19 billion rouble value accretion from the RusHydro premium and 6 billion rouble value destruction from the premium valuation of Irkutskenergo. The Irkuskenergo dams have also been valued reasonably and in line with previous guidance, which we also see as supportive for RusHydro shares.”
Sergey Beiden, Senior analyst at Otkritie Capital, says the news is positive and aligns with company plans on consolidation of hydro assets
“First of all, this notion is hailed by minority shareholders and positive for company in the whole. Lest you forget, Irkutskenergo has been valued with premium to the market and the current RusHydro valuation stands 20% with premium to the market as well. Initially, RusHydro has set up pricing in the range of 1.5-1.66. Obviously, this pricing is targeting the strategic investors, notably the government which controls 58% in the company and after the transaction will cut its stake to 55%. Another core shareholder involved in the transaction is Inter RAO which currently owns 40% in Irkutsk energo. There by, the government will receive 30 billion ordinary shares in RusHydro and Inter RAO will obtain 20 billion shares for 40% of Irkutsk energo. Ultimately, the total amount of share placement will be around 50 billion ordinary shares, which is almost 40 billion les than has been approved. Here above, the situation becomes clear that this move is more about consolidation rather than attraction of funds or cash in.”