Russia's largest power generating company is planning a £800m float in London which would value the company at £3.2bn.
The board of Mosenergo, which owns the power stations supplying the Moscow region, will meet its parent company, UES, later this month about its restructuring plans. A meeting has been pencilled in for 20 September.
UES, run by former Russian first deputy prime minister Anatoly Chubais, owns 51 per cent of Mosenergo and must approve the London listing for it to take place. There is no guarantee that UES, which is itself controlled by the Russian government, will give the green light.
But UES, which owns the country's power stations through dozens of operating companies such as Mosenergo, wants to raise almost £42bn for the investment-starved electricity sector by the end of the decade. If approved, a listing could see 25 per cent of Mosenergo's equity listed in London and would take place early next year. Another UES subsidiary, OGK 5, is also planning a listing in London later this year as part of the group's restructuring. But Mosenergo, also known as TGK 3, is much bigger than its Urals-based sister company.
Mosenergo is already listed on the Moscow stock exchange but trading in its shares is limited. UES currently owns 51 per cent of the shares, the Moscow authorities 7.5 per cent and Russian state-controlled gas giant Gazprom around 30 per cent. As part of the restructuring, UES is looking to dilute its stake by half, leaving it with a quarter of the shares.
Al Breach, chief strategist at Brunswick UBS, a Moscow arm of the Swiss investment bank, said a listing in London issuing tradable Global Depository Receipts (GDRs) would be the most likely route to offload the stake: "Mosenergo is likely to go for a foreign listing such as London to trade GDRs. That is the way things are heading in Russia."
A strategic investor is likely to take up a significant proportion of the shares, with institutional investors taking much of the rest. Gazprom could seek to increase its stake, he said.
Other strategic investors who might gain a seat on the Mosenergo board are German utility E.ON, which itself owns 2.5 per cent of Gazprom, fellow German group RWE, and French firms EDF and Electrabel. The Italian group Enel has said it wanted to invest £2.7bn in gas and power.
Russian state-controlled oil giant Rosneft listed in London in July, raising £5.6bn. The successful flotation has encouraged the Kremlin to raise more funds in this way.Reuse content