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. Last Updated: 07/27/2016

Generation Firm Goes on Market

A generating firm valued at $1 billion began trading on the MICEX on Wednesday in a step forward for the politically fraught power sector reforms aimed at breaking up monopoly Unified Energy Systems.

UES said the generating firm, known by its Russian acronym OGK-5, would also start trading on the dollar-denominated RTS on Friday after its placement on the ruble-based MICEX exchange.

"This is one comforting sign that the reforms are moving forward. UES has delivered," Sovlink brokerage analyst Shani Kogan said. "There is excitement that it's finally happening."

Price indications were all over the place, with bids at 8 rubles (28 cents) and offers at 150 rubles ($5.30) as the market tried to set a benchmark for other generating companies that will make their bourse debuts in the next year or so.

"We don't know what valuation to make," one trader said.

The debut follows a swap deal earlier this month with minority shareholders of Konakovskaya power station, the only one of the company's four operations to have minority shareholders.

The generating firm must still complete an additional share issue to bring power station Konakovskaya GRES, north of Moscow, under 100 percent control. Many investors had been buying up shares in Konakovskaya in the hope that they could trade them into shares in OGK-5.

"Investors that were betting on this swap into OGKs are not disappointed," said Kogan.

The formation of OGK-5 is a pilot project for UES, which has to organize and bring to market a further five companies next year.