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. Last Updated: 07/27/2016

Enel Wins Full Control of OGK-5

Itar-TassAnatoly Chubais and OGK-5 general director Anatoly Bushin announcing the sale of shares in the firm last November.
The Federal Anti-Monopoly Service has allowed Italy's Enel to take full control of wholesale generator OGK-5, which will become the country's first power utility to be fully owned by a foreign firm.

"The agency has given permission for Enel to buy 70 percent of OGK-5, which, together with its existing stake, represents 100 percent of the charter capital," an agency spokeswoman said Friday.

CEO Fulvio Conti said earlier that Enel would make a takeover offer for OGK-5 after it won approval from Russian anti-monopoly authorities.

Enel, Europe's third-biggest power company, could present a formal bid by the end of September, a source close to the operation said Friday. The Italian firm is busy expanding outside its home market where its former state monopoly position makes growth difficult.

OGK-5 shares rose 10.8 percent on the news to 3.97 rubles.

Alfa Bank called the news positive for Russian generators, as this would be the first time a foreign investor was allowed to gain control over one. "This would also mitigate the risk of discrimination against foreign strategic investors under the ongoing privatization process of the Russian gencos," it said in a research note.

OGK-5 is one of six power wholesalers spun out from Unified Energy System. Enel became the first strategic investor in the country's power generating sector when it bought a blocking minority stake in OGK-5 from UES at an open tender in June for over $1.5 billion, or 17 cents per share, paying a premium of more than 15 percent to the market price.

Alfa Bank said it did not rule out that Enel would have to pay a similar premium in the new buyout.

"Although the buyout price is unknown, we believe it is likely to end up very close to 17 cents per share, similarly to the price paid for one of its previous deals for OGK-5 shares," the note said.