UPDATE 1-Russia's Transneft shares soar on MSCI Russia entry

UPDATE 1-Russia's Transneft shares soar on MSCI Russia entry

http://af.reuters.com/article/energyOilNews/idAFLDE6AA0JV20101111

Thu Nov 11, 2010 9:21am GMT

* Oil pipeline monopoly surges 8 pct on surprise inclusion

* Power group MRSK left out once again, shares drop

(Adds analyst comment, detail, updates shares)

MOSCOW, Nov 11 (Reuters) - Preference shares in Russian oil pipeline monopoly Transneft (TRNF_p.MM) surged more than 8 percent on Thursday after the stock was surprisingly added to the influential MSCI Russia share index.

The company, responsible for transporting Russia's vast reserves of oil to the rest of the world, was the only change to the index following a biannual review.

The MSCI Russia index is used as a benchmark by emerging market investors worldwide.

The move came as a shock to the market, which had tipped regional power group MRSK (MRKH.MM) as the most likely candidate for inclusion due to increased liquidity. [ID:nLDE6A9233]

"MRSK, our first choice (for inclusion), was overlooked this time, probably as it was unable to meet the 50 percent relative liquidity requirement," analysts at Renaissance Capital said in a note.

MRSK had also been tipped for inclusion, again without success, ahead of the last two reviews.

Its shares were down nearly 4 percent at 0853 GMT.

Transneft, nearly 80 percent owned by the government, caused a flurry of excitement in the investment community earlier this year when it was included on an early draft of companies to be privatised by the state.

The company's management was against the sale of a stake however, and the plan was later dropped after it emerged that bond covenants prevented a change in the shareholder structure. [ID:nLDE69K0N2] (Reporting by John Bowker; editing by Maria Kiselyova and Hans Peters )

Russia's FSK says half year net profit up 60 percent

MOSCOW | Thu Nov 11, 2010 12:57pm IST

MOSCOW Nov 11 (Reuters) - Russian power grid operator FSK (FEES.MM) said on Wednesday its half year net profit jumped nearly 60 percent to 12.6 billion roubles ($411.2 million), up from just under 8 billion in the same period last year.

The company is one of the headline names on a list Russia is seeking to privatise as part of a $60 billion fund-raising plan.

(Writing by John Bowker, Editing by Maria Kiselyova)

EuroSibEnergo to raise $1.5 bln in Asian IPO

MOSCOW, November 11 (RIA Novosti) - Russia's largest private energy company EuroSibEnergo plans to hold an Initial Public Offering (IPO) on the Hong Kong stock exchange to raise $1.5 billion, a source close to the placement told RIA Novosti on Thursday.

"The company intends to sell 25 percent of its shares. Next week the IPO lead managing banks will already start meetings with investors, but without the company's representatives," the source said, adding the company planned to increase its value to $6 billion after the IPO.

EuroSibEnergo refused to comment.

http://www.businessneweurope.eu/dispatch_text13579

bne
November 11, 2010

EuroSibEnergo, the power utility owned by Oleg Deripaska, plans to seek $1.5bn in an initial public offering in Hong Kong by the end of the year, Bloomberg reports. The plan is the latest attempt by Deripaska to raise much-needed money on Hong Kong's bourse, which offered huge support to the Rusal float at the start of the year in hope that it would open the floodgates to Russian listings.

EuroSibEnergo plans to sell a 25% stake, a person familiar with the matter said, declining to be identified because the information hasn't been made public. The company will start meeting with potential investors next week, the source said.

Deripaska is still seeking cash to help with the huge debt burden accumulated during the financial crisis, and offer him ammunition in the fight over Norilsk Nickel. Just last week, Deripaska's En+ Group said that it had secured a $900m loan from state-controlled investment bank VTB Capital to complete the refinancing of debt, which allowed the group to regain control of a 25% stake in EuroSibEnergo that had been held by banks as collateral.

Selling EuroSibEnergo would raise money for Deripaska's cash-strapped En+ Group, but it remains unclear whether investors will have much appetite for the offering. Deripaska tried in May to list his small molybdenum miner, Strikeforce Mining and Resources (SMR), but investors rejected the share pricing, and the application to list was withdrawn without a prospectus for the heavily indebted mining company ever appearing in public, according to Deripaska basher John Helmer on his website 'Dances with bears'.

"This valuation looks a little bit expensive compared with its emerging-markets hydro-generator peers," said Alexander Seleznev, an analyst at UralSib. "An IPO would improve transparency because it would show the detailed accounts of both its main assets, IrkutskEnergo and Krasnoyarsk Hydro Power Plant."

The sale would be the second by a company controlled by Deripaska in Hong Kong this year. United Company RusAl, the world's largest aluminum producer, raised about $2.2 billion in January in the first IPO in China by a Russian company. It continues to trade below its IPO price.

With that poor performance added to the struggles of Russian floats which are not exposed to consumer spend so far this year, the chances of EuroSibEnergo's bid to list going the same way as SMR appear viable. However, Deripaska could be tempted to push it through at a lower price as he is currently trying to put together a bid to buy out rival shareholder Interros from Norilsk.

EuroSibEnergo sells more than half its electricity to RusAl and is Russia's second-largest hydropower producer after RusHydro. Deripaska owns EuroSibEnergo via the same EN+ Group holding company that holds his 48% stake in RusAl. EuroSibEnergo's profits could be crimped by Deripaska's need to ensure cheap electricity for his aluminium production line.