Two of them want to team up to gain control

Ten potential investors immediately became interested in the additional issue of TGK-2. The power plants of the generating company have already been visited by several Western strategists, including the German concern RWE and the Japanese Mitsui. However, market participants consider Fortum to be the most likely contender, which could become a partner of the Prosperity Capital Management fund, which owns a blocking stake in TGK-2.

The fact that ten potential investors have already shown interest in TGK-2 shares was reported by Alexander Chikunov, a member of the board of RAO UES of Russia, as quoted by Interfax. The data room for investors as part of the sale of TGK-2 shares is already open, and, according to Mr. Chikunov, three international companies have already visited TGK stations in Yaroslavl. “There is very strong competition for those companies where control is being sold. Among the contenders for TGK-2 shares, in particular, are European, Korean, and Japanese companies,” said Alexander Chikunov, without specifying what kind of companies they were.

The sale of the additional issue and state stake in TGK-2 will take place in February-March 2008. Investors will be offered 21% of the shares of the increased authorized capital. It is planned that the placement will bring the company 9 billion rubles. The volume of the state stake will be approximately 26%. In total, RAO UES owns 49.36% of the shares, another 27% is controlled by the Prosperity Capital Management fund, according to its own data.

As TGK-2 representative Mikhail Chirkov told Kommersant, official applications for the additional issue of the generating company will be formed in December. An extraordinary meeting of TGK-2 shareholders is scheduled for December 5, at which the issue of approving the additional issue will be considered. The placement of shares should end on February 28, 2008. A Kommersant source familiar with the preparations for the placement says that TGK-2 is interested in MMC Norilsk Nickel, Gazprom and Trans Nafta. Among Western investors, he names the German RWE, the Japanese Mitsui, the Franco-Belgian SUEZ and the Italian Enel, which have already visited TGK-2, as well as the Korean KEPCO and the Finnish Fortum. The tenth contender for control in the generating company is its minority shareholder Prosperity Capital Management. As Prosperity Managing Director Alexander Branis told Kommersant, the fund is in the final stages of negotiations with a Western partner, with whom it plans to buy out the additional issue. “We are seriously aimed at gaining control in TGK-2,” explained Mr. Branis, without specifying with whom exactly the negotiations are underway. A Kommersant source at RAO UES confirms that the most likely contender for a controlling stake is this consortium.

Analysts believe that TGK-2 will really only be of interest to Western strategists. “TGK-2 itself is not very effective, it is one of the last two TGKs where there is no strategic plan,” says Otkritie FC analyst Vasily Sapozhnikov. “Russian companies will not be very interested in TGK-2: the share of fuel oil in the fuel balance is high and its development requires large amounts of funds." According to the analyst, Western companies are willing to pay a lot to enter the Russian market, as well as invest in new technologies. “At the same time, the consortium of a Western strategist with Prosperity has the greatest chance of winning,” adds Antanta Pioglobal analyst Dmitry Terekhov. Both analysts consider Fortum to be the most likely contender for TGK-2, which "was probably promised something for leaving Lenenergo." Fortum does not comment on this information.

Vladimir Kommersant-Ravinsky

Ten investors came for TGK-2