Enel Buys OGK-5 Stake From Credit Suisse

by Stewart Douglas

Story link: Enel Buys OGK-5 Stake From Credit Suisse

Europe’s third largest utility group Enel has today announced it has reached an agreement with investment bank Credit Suisse over the former’s stake in Russian group OGK-5 in a move that will see it become a major shareholder in the company with a view to increasing its foothold in the central European energy market.

Italian power giant Enel reached agreement with the investment bank to acquire its existing stake in the Russian power giant for around 300 million euros, in order to comply with Russian company law requirements, which will see it become a majority shareholder with a 30.75 percent stake.

Furthermore, Russian law will subsequently require Enel to make bids for further minority holdings as a compulsary step towards ensuring it buys over the entity, at a set price not less than 4.43 rubles each per share, which should see it cement its place as a major player in the global utilities market.

OGK-5 currently provides electricity to the Russian market, playing a highly controversial political and economic role, with European energy companies under threat from what it sees as a Russian monopoly environment in energy supply through Central Europe.

As a result, European Union regulations have forced many Russian suppliers to decentralise operations, which had the potential for giving rise to significant expense in order to enter the European market.

The Enel acquisition looks set to allow the Russian operation to integrate within its current corporate structure, with a view to providing Russian energy through Enel’s existing European channels which looks set to give Enel a greater market share in European power supply.

The shares were acquired from investment bank Credit Suisse for 4.28 ruble per share, totalling around 10.8 billion ruble for the entire stake of 7.15%, which will make Enel the company’s major shareholder.