2 Foreign Firms, Rosneft Eye TGK-10

Rosneft, Finnish utility Fortum and Gas de France are considering bidding for control of TGK-10, a source close to the deal said.

The three energy giants have signed confidentiality agreements allowing them to enter the company's data room, which lays out information to potential investors, the source said Thursday.

Norilsk Nickel has also expressed interest but has not yet signed the agreement, the source said.

In February, TGK-10, or Territorial Generating Company No. 10, plans to hold a secondary offering of 633 million shares, equal to 136.55 percent of its share capital before the sale and 57.73 percent after. At the same time, TGK-10's parent company, state utility Unified Energy System, will sell the government's stake in the generator, equal to 255.56 million ordinary shares.

The company is being sold as part of a sweeping reform of the power sector, which will see all UES assets sold off by July with the aim of raising investment and introducing competition to the electricity market. TGK-10, which has a generating capacity of 2.8 gigawatts, provides power and heat to five regions of western Siberia, including Khanty-Mansiisk and Tyumen.

The firm is also attractive because of the size of its secondary share sale, the source said.

By buying up all the new shares being issued, a strategic investor could get control of the company and thus also regain effective control of the capital used to buy those shares, as it ends up back on the company's balance sheet.