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Naftogaz to Sell 15% of Unit in IPO to Boost Ukraine Market

NAK Naftogaz Ukrainy is planning to sell 15 percent of its gas extraction unit in an initial public offering next year.

Ukrgazvydobuvannya’s market value may reach as much as $12 billion by 2015 if the government allows the company to raise gas prices, chief adviser to the chairman, Yuriy Vitrenko, said by phone yesterday.

Agricultural producer Ukrlandfarming Plc yesterday said it was considering an IPO in London and Hong Kong as local businesses struggle to raise funds amid a separatist uprising in the country. The benchmark UX Index fell 1.5 percent to the lowest close since May 23 in Kiev as government troops retook a majority of districts in the east after peace talks with Russia faltered.

The IPO will be “part of an overall reform of Ukraine’s gas market,” Vitrenko said. “It would be much easier for us to sell internationally, but the idea is to also help make the domestic market more attractive.”

Ukraine’s 10-member gauge, which has gained 31 percent this year, has a market value of about $3 billion, compared with $628 billion for neighboring Russia’s benchmark stock market.

Naftogaz will have difficulty raising money from a listing intended for the domestic exchange as “participation and trading in Ukraine’s equity markets is minimal,” Dmitri Petrov, a London-based analyst at Nomura Holdings Inc., said by e-mail. “The political situation will have to stabilize before there can be any IPOs in Ukraine.”

To contact the reporter on this story: Natasha Doff in London at ndoff@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Chris Kirkham, Stephen Kirkland

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