The Challenge

RusHydro had approached Mitsui with a direct request to provide an indicative bid price for the purchase of 5% of RusHydro’s shares. RusHydro is Russia’s largest power-generating company and, with installed power generation capacity of about 33 GW, the second largest hydroelectric power producer in the world. If sufficient, the indicative bid price would ensure that Mitsui would receive a Letter of Intent to carry out more detailed due diligence and develop a firm offer for the shares. Mitsui thus required a market study and valuation report to support the development of the indicative bid price.

Our Solution

IPA provided the market study and valuation report which included the following:

  • An overview of the Russian Power Market and RusHydro’s operations within that market;
  • A bespoke Russian power market model which was used to develop Russian Power market forecasts, taking account of policy, demand, supply and pricing dynamics;
  • An assessment of the outlook for RusHydro’s future revenues in the context of the Russian power market dynamics;
  • An assessment of RusHydro’s potential value, from which an indicative price bid was developed;
  • An indicative value for the company’s shares;
  • An assessment of the likelihood and potential impact on the valuation of key risks; and
  • An overview of RusHydro, describing its assets and the performance of those assets, its financial performance and the principal drivers of its profitability.

With IPA’s support, Mitsui came to an agreement with RusHydro to purchase the 5% stake in the company. This sale was the first time that RusHydro’s shares had been sold to a foreign company.