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. Last Updated: 07/27/2016

UES Inter RAO Unit Plans IPO for 2009

National utility Unified Energy System's import and export firm Inter RAO will launch an initial public offering in 2009 on both foreign and local exchanges, the firm's strategy director, George Rizhinashvili, said Monday.

"We have already started this process. In 2008 we will get our financing through loans, even though we plan for some of the [existing] shares of Inter RAO to start trading already in 2008," Rizhinashvili said.

Inter RAO is the export arm of state-controlled utility Unified Energy System, which holds a 60 percent stake in the firm. State-owned nuclear energy monopoly Rosenergoatom owns the rest.

Part of the funds will go towards increasing the firm's power production capacity, which now stands at 7 gigawatts. Some 5.75 gigawatts of Inter RAO's production capacity are at installations outside of Russia, mainly in Moldavia, Georgia, Armenia and Kazakhstan.

Over the next seven to eight years, Inter RAO plans to spend between $14 billion and $15 billion to raise this capacity more than fourfold to 30 gigawatts, Rizhinashvili said.

"The company's position and its strategy calls for expansion in the fast growing markets of the former Soviet Union, as well as in Europe and Asia," he said.

Inter RAO, a vertically integrated firm with more than 20 subsidiaries in 10 countries, depends on the sale of power at home and abroad for 66 percent of its income. Most of the rest comes from its power distribution networks.

Its parent company, UES, is in the process of selling off all of its assets so it can cease to exist by July 2008.

The goal of the sell-off is to raise investment for the country's antiquated power systems and to open the power market to free competition for the first time.

Inter RAO is considered a strategic asset by the government and will be controlled by the state after it is broken off from UES.

Rizhinashvili said Inter RAO shareholders would meet Dec. 12 to discuss the future structure of the company, which has not yet been made clear.

Rosenergoatom has resisted the consolidation of Inter RAO's subsidiaries into a single firm, as such a structure would threaten its ability to hold on to even a blocking stake.

Inter RAO officials have said the most likely structure will be a holding company of various electricity assets.

n UES will offer new shares in its TGK-7 unit to the public and sell the government's outstanding stake separately through an auction, chief financial officer Sergei Dubinin said Monday, Interfax reported.

The company will sell TGK-7 shares in the first quarter of 2008 and seek a stock-exchange listing for the unit, while the auction will go ahead in the second quarter, Interfax reported.

UES's board will vote on the plan Nov. 30, the company said.

Reuters, Bloomberg