CVC reportedly mulling IPO of Poland’s PKP Energetyka distribution unit

By bne IntelliNews June 13, 2016

CVC Capital Partners, the owner of Polish energy company PKP Energetyka, is reportedly mulling a plan to separate the distribution unit from the company and possibly float it on the Warsaw Stock Exchange, local media reported on June 13.

The separation of the unit may be a goodwill gesture from the private equity fund aimed at the Polish treasury, Dziennik Gazeta Prawna speculates. The ruling Law & Justice (PiS) party has been critical of last year's sale of PKP Energetyka by state rail operator PKP from well before taking office in November. The statist party insists the privatisation - and many others - could compromise Poland’s energy security.

CVC Capital Partners is reportedly eyeing a model that would see it cede control over the distribution unit, while retaining its grip on the wholesale energy trade unit. The move would resemble the unbundling of large state utilities in recent years under European Union regulations.

“The activity of the [separated energy distribution unit] will be controlled by [energy market regulator] URE. It is about increasing transparency and cooling emotions concerning the privatisation of PKP Energetyka,” CEO Wojciech Orzech claims.

Orzech also said he could not rule out flotation of the spun off unit on the Warsaw Stock Exchange. However, he declined to reveal details.

The sale of the power unit - which has a comprehensive energy distribution network - by the national rail company took place in 2015 amidst objections raised by PiS - then in opposition - which said energy distribution should remain in the state’s hands. Since taking power, the party has pledged to scrutinise several privatisations carried out by its the previous civic Platform administration.

The government has also stated that further sales of state assets have now been stopped altogether, except for companies considered unimportant.

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