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. Last Updated: 07/27/2016

Gazprom Targets OGK-5

Gazprombank, the banking arm of Gazprom, wants to buy a blocking stake in power-generation firm OGK-5, deputy CEO Alexei Matveyev said Thursday.

"This is a promising sector," Matveyev said, but gave no details of the acquisition plans.

Banking sources said Gazprombank had bid to buy an entire additional share offering made by OGK-5 in October, which raised $459 million at 9 cents per share, near the top of its indicative price range.

But Gazprombank ended up getting less than a 1 percent stake, the sources said.

OGK-5 is one of six wholesale generation firms spun off from Russian electricity monopoly Unified Energy Systems under a major restructuring plan designed to create competition in the sector.

Gazprom is expanding in the sector. It also plans to buy a stake worth as much as $2.1 billion in Moscow power generator Mosenergo.

Analysts note, however, that the majority of OGK-5's power plants are coal-fired.

OGK-5, whose name means Wholesale Generating Company No. 5, sold about 14.1 percent of its capital in the pilot additional share issue, whereby the European Bank for Reconstruction and Development bought a stake of just over 1 percent and Gazprombank less than 1 percent according to market sources.

Finnish energy group Fortum and state bank Vneshekonombank also each bought 1 percent or slightly more than 1 percent, the sources said.

The offering raised the free float of OGK-5 shares, which already trade on Moscow's MICEX stock exchange, to 25 percent.

OGK-5 owns one thermal power plant near Moscow, one in southern Russia and two in the Urals region and produces about 6 percent of all electricity in the country.