Business & Financial News

Enea, the last group of Polish utilities still controlled by the state, should fall into the hands of a French EDF and GDF Suez, which have the greatest potential for synergies, analysts said.

EDF seeks to locate in Poland to increase its chances of participating in the nuclear program that Warsaw intends to implement, while GDF Suez has sufficient capacity to address current shortcomings of Enea.

The Polish government wants to sell by the end of the year to 51% of Enea estimated at around 5.9 billion zlotys (1.48 billion euros) under the privatization plan for generate revenue to reduce the deficit.

Poland has shortlisted five candidates in August to the potential recovery of this participation: apart from the two French groups are on the list of Spanish utility Iberdrola, Kulczycki Investments, the investment vehicle of Polish businessman in January Kulczyk and Czech Energetický has Prumyslovy Holding.

The remaining candidates have until Oct. 5 to submit a firm offer.

Enea has 2.9 gigawatts of installed capacity in its central Kozienice and 2.3 million customers, individuals and businesses.

This portfolio of clients is by far seen as its greatest asset.

"The main asset of Enea, what are its customers and its market share (in distribution).Poles are reluctant to change their electricity supplier, "said Robert Zadjler, analyst Instytut Sobieskiego.

"The generation assets are old and need to be modernized, so it is difficult to estimate their value."

STRENGTHS

For now, demand from customers Enea is greater than its production capacity, which forces it to buy power on the wholesale market.

This situation calls for GDF Suez, which has a power plant Polaniec in south-eastern Poland, and has yet to expand its customer base.

The market share of Enea, about 16%, EDF has something of interest that, if he does not yet have significant production capacity in Poland, wants to take forward the Government's plans to build at least two nuclear power plants with a total capacity of six gigawatts.

Warsaw named EMP, first group of local utilities, to conduct this project, of which 49% should be sold to an investor.

"In the context of nuclear program, offers French have the best chance of winning," said an analyst.

The other groups, whether Iberdrola or financial investors do not have the same strengths that EDF and GDF Suez, which makes their offerings less competitive.

In August, a deputy Treasury Minister said he expected that the applicant submit a higher bid from 20% to the market valuation, which amounts to more than 26 zlotys per share.

Analysts are showing less optimism. Nine of them, interviewed by Reuters, evaluate the group at 23 zlotys per share, or 9.8% above Tuesday's closing price, valuing the group at 51% of 5.2 billion zlotys.

This difference is mainly due to the recent decision of the Swedish Vattenfall to change strategy and to consider selling some of its assets, particularly in Poland.

"Vattenfall's decision is bad news for the record, for two reasons.The first is that in future there will be more assets to sell and the second is that it highlights the difficulties and challenges of this market, "said another analyst.