Inter RAO selling blocking stake in Enel OGK-5 for $625 mln
MOSCOW. March 2 (Interfax) - OJSC Inter RAO UES is selling its 26.43% stake in wholesale generating company OJSC Enel OGK-5 to a consortium of investors consisting of Xenon Capital Partners' Rusenergo Fund, Macquarie Renaissance Infrastructure Fund and the Russian Direct Investment Fund (RDIF), the state company said in a press release.
Under the structure of the deal, Inter RAO will receive a fixed amount of $625 million at the closing of the sale, and will also get a share in future proceeds of the consortium exceeding 18% of the base level of return from the investment. Inter RAO will receive the full amount of such excess proceeds up to $125 million as well as 20% of proceeds further above.
The market price of the blocking stake in OGK-5 at closing on MICEX-RTS on March 1 was almost $690 million.
"The transaction will be completed after accomplishing relevant corporate procedures and receiving approvals of regulatory authorities," the company said.
Inter RAO plans to use the proceeds from the deal to finance its investment program, focused on construction of generating facilities in Russia in line with capacity delivery agreements.
RDIF head Kirill Dmitriyev told Interfax that the fund's participation in the consortium amounts to a quarter interest. "It is very important that we managed to attract a number of investors to this project, including Macquirie Renaissance," he said.
Dmitriyev said RDIF intends to hold on to its investment in OGK-5 for five to seven years. He did not disclose any other details of the deal, including the maximum amount that Inter RAO might earn.
"Enel OGK-5 is a superior asset, with low leverage, strong fundamentals and a world-class partner in Enel," Natasha Tsukanova, founder and managing director of Xenon Capital Partners was quoted as saying in the press release. "Hence, we were delighted to act as investor in this transaction, which highlights our capabilities to facilitate and attract high quality institutional investors with longer term investment horizons."
The CEO of Macquarie Renaissance, Damian Secen concurred, saying that "MRIF is delighted to have acquired a major stake in Enel OGK-5" as it "represents an excellent opportunity for MRIF to participate in this fundamental sector of the Russian economy."
Inter RAO chief executive Boris Kovalchuk said the company is strictly following its development strategy through 2015, "and the sale of its blocking stake in Enel OGK-5 is fully in line with the strategy's approach to dispose of assets." Inter RAO's strategy calls for the sale of all minority stakes it acquired in the course of the consolidation of energy assets, including the stake in OGK-5.
Inter RAO initially considered swapping the stake in OGK-5 for the Maritsa Vostok-3 power plant in Bulgaria, which was owned at the time by Italy's Enel, OGK-5's controlling shareholder. But the deal did not take place and this asset was sold to a third party. Subsequently, Inter RAO expected to sell the stake to Enel, but Kovalchuk later said the company was not happy with the price. He also spoke of the possibility of selling the stake to investment funds, but did not specify which investors he had in mind.
Macquarie Renaissance Infrastructure Fund is focused on investment in infrastructure assets in Russia and other CIS countries. It has $630 million in assets under management. MRIF's principal investors include Vnesheconombank (VEB), the IFC, EBRD, Eurasian Development Bank, Kazakhstan's Kazyna Capital Management, Macquarie Group and Renaissance Group.
RDIF, which was registered in mid-2011, is a wholly owned subsidiary of Vnesheconombank (VEB). The government plans to invest $10 billion in the fund over five years.
Xenon Capital Partners, founded in 2009, manages $2 billion in assets.
Enel OGK-5, which is registered in Yekaterinburg and 56.43% owned by Italy's Enel, operates the Nevinnomyssk, Konakovo, Sredneuralsk and Reftinsky power plants, located in the Urals, Central and Southern Russia. Enel OGK-5 has installed capacity of 9,562 MW.