Updated July 16, 2008

   On July, 16 the government-regulated Federal Grid Company of Unified Energy System JSC (JSC FGC UES) has started to trade its stocks on stock exchanges. From the start FGC capitalization totals $24 billion – at the lowest level of forecasts. Gazprom became the largest minority stockholder of the company with 4% stocks. The market has been for long waiting for securities, as their weight in energy assets’ package is 16-20%. FGC and RusHydro are considered prospective "blue chips". However, energy companies’ quotations are currently falling, and analysts do not wait their growth before autumn.

   MICEX (Moscow Interbank Currency Exchange) and RTS (Russina Trading System) have already started to trade FGC stocks. As told the company press secretary Olga Kindyashova, as a result of RAO UES reorganization FGC has gotten more than 440 000 stockholders, and now they have an opportunity to trade the received company stocks on stock exchanges. On July, 14 RAO UES stockholders got securities of all energy companies, including FGC, in terms of conversion. The company was assigned with FEES ticket, and its stocks were included in quoted lists B. Estimated price of one FGC stock was RUR 0,50 at the beginning of trade.

   FGC establishment was completed on July, 1. All stockholders – JSC RAO UES of Russia, JSC State Holding, JSC Minority Holding of FGC UES, 54 backbone grid companies and 7 inter-regional backbone companies – received JSC FGC UES stocks in proportion to their stakes and according to coefficients of stocks conversion. In terms of conversion, the government stake in FGC is 77,66%, and minority stockholders own 22,34% stocks. And they are: Gazprom (4%), Bank of New York International Nominees (2%), Otkritie FC (1,7%), Electric power index of FGC and Electric power index of RusHydro (coupled 1,6%), InterRos Holding (1,4%), JSC Far Eastern Energy Company (1,1%).
On July, 1 in Unified State Register of Legal Entities was recorded about activity termination of the companies consolidated with FGC.

   Analysts safely forecast that in the nearest future there will be two "blue chips" in the energy sector – JSC RusHydro and JSC FGC. They gave different preliminary estimations of the initial price of FGC trade: UniCredit – at RUR 0, 49 level, Capital IG – at RUR 0,67, Otkritite FC – at RUR 0,75. As evaluated by Otkritite FC analyst Vasiliy Sapozhnikov, the state bought FGC additional issue out for RUR 0,79 to increase its stake. However, he forecasts quotations movement at RUR 0,40-0,50 level in the future, and then – at RUR 0,50-0,60.

   Sovlink IG analyst Ekaterina Tripoten expects that within first two weeks of trades FGC quotations can fall. "There are plenty of stocks at the market now in terms of RAO UES reorganization, therefore someone strives to fix an income", as an analyst explains. "Moreover, the market state is not very good on the whole". Vasiliy Sapozhnikov considers that despite dire market situation, it has been impossible to put off trades of FGC stocks. "And still, FGC totals around 16-20% from energy assets’ portfolio and one expects it becomes the most liquid security in the sector", an analysts marks.

   Experts forecast that FGC price evens in autumn, and by year-end its capitalization can attain $30 billion (with stocks price at RUR 0, 50 per stock it attains $24 billion). However, rapid quotations’ growth was forecasted for RuHydro as well, that started to trade securities on stock exchange in early year. Ever since its capitalization had fallen already by 20% down, and peak of falling was within the last month, after Vyacheslav Sinyugin left the chairman post of the company board. And new company head is not appointed yet, but analysts consider that appointment hardly affects quotations, and price growth of all energy companies’ stocks takes place after oversupply disappears. It appeared in terms of energy reform completion – RAO UES stocks conversion into securities of all subsidiaries.