Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

E.On and Enel Preparing Bids for OGK-5

German energy giant E.On and Italy's power firm Enel will bid for 25 percent in wholesale power firm OGK-5 in June and have already put down deposits, an industry source said Friday.

The source close to the sale said both firms had paid a $97 million deposit to participate in the June 6 auction, when the stake will be sold at a starting price of $957 million -- 30 percent below its current market value.

He said two Russian bidders had also sent applications, but that they had yet to put down deposits. He did not name them but said Gazprom was not among them.

Gazprom; industrial conglomerate Interros; coal and energy firm SUEK; the investment vehicle of billionaire Viktor Vekselberg, KES; and Finish Fortum are among the most active bidders for Russian power assets, which are being spun off from former power monopoly Unified Energy Systems.

"Given the interest in the stake, we expect it will be sold at a premium of $1.25 billion," UralSib bank said in a note.

OGK-5 is one of six diversified thermal generation companies located in central Russia and the Urals, where demand for electricity is currently outpacing production capacities.

OGK-5 trades at an enterprise value and installed capacity multiple of $540 per kilowatt, compared with $820 per kilowatt for developing market peers, and $1,181 per kilowatt for developed market peers, UralSib said.

The auction will reduce UES's stake in OGK-5 to 50 percent from the current 75. OGK-5's current minority shareholders include Gazprom, Fortum, gas firm Novatek and the European Bank for Reconstruction and Development, Vedomosti reported.