PGE Tumbles Most in Year as Poland Selling $436 Million Stake

PGE SA, Poland’s largest power utility, slumped the most in a year after the government offered a 3.5 percent stake to raise funds for investments.

The shares fell as much as 7.4 percent and closed 6.6 percent lower at 20.45 zloty, cutting this year’s gain to 26 percent. The government and state-owned fund Polskie Inwestycje Rozwojowe SA, known as PIR, set the final price in the sale of 65.4 million shares at 20.25 zloty each, according to three people familiar with the transaction, who asked not to be named because information isn’t public. The terms value the deal at 1.33 billion zloty ($436 million.)

Poland is selling stakes in publicly traded companies to help PIR finance investments in oil exploration, power generation and telecommunication industries. The government approved in 2012 a plan to sell parts of state-owned stakes in PGE as well as PKO Bank Polski SA, insurer PZU SA and chemical producer Ciech SA to help quicken investments through the fund.

“Utilities are popular as they offer high dividends while interest rates are low,” Jakub Bentke, who helps manage the equivalent of $1.3 billion of assets at mutual fund KBC TFI SA in Warsaw, said by phone today. “Polish power prices have also started to rebound.”

PGE was the best-performing stock in Warsaw’s WIG30 Index in 2014 through yesterday as the country’s accelerating economy helped boost electricity prices. Price of Polish power for delivery next year rose 11 percent this year to 174.5 zloty per megawatt hour today, recovering from a 13 percent decline last year, according to broker prices on Bloomberg.

Tauron Polska Energia SA, the country’s second-largest power utility, declined 2.3 percent today and its peer Energa SA, which went public last year, retreated 1.4 percent.

Deutsche Bank AG, Goldman Sachs Group Inc., UniCredit SpA, Societe Generale SA, Banco Espirito Santo SA and PKO Bank managed PGE’s sale today.

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