OREANDA-NEWS. August 23, 2007. IES-Holding's investment fund I.D.E. Electricity Distribution Investments 1 Ltd which specialises in investment in the Russian power grid sector has performed as the buyer of 4.4% of voting shares of OJSC Lenenergo from Fortum Power and Heat Oy. RAO UES of Russia became the owner of 3.34% in the authorised capital of OJSC Lenenergo. The rest of the OJSC Lenenergo shareholding was purchased from Fortum by I.D.E. Electricity Distribution Investments 1 Ltd in an alliance with VTB Bank as part of a joint structured funding deal. I.D.E. Electricity Distribution Investments 1 Ltd and VTB Bank perform solely as portfolio investors.

The investment decision of the power grid fund is based on an assessment of the company's development potential which is closely linked with the development of the region. OJSC Lenenergo provides the groundwork for the economic development of St Petersburg as one of the leading Russian regions in terms of economic growth rates. The dynamic development of the city and the region leads to growing power consumption, which allows estimating the company's development prospects as very promising in the medium-term.

Plans for implementing the investment programme aim to upgrade power grid assets, decrease the high level of deterioration of fixed assets and eliminate a considerable portion of capacity deficit. "We see sufficient sources to finance the declared investment programme, more so, that the average weighted level of electricity prices in Lenenergo is one of the lowest in Russia," said Konstantin Shevchenko, a spokesperson for IES-Holding's power grid fund.

I.D.E. Electricity Distribution Investments 1 Ltd and VTB support the idea of an additional share issue in favour of the city government and the St Petersburg administration as one of the main shareholders of OJSC Lenenergo because the government of St Petersburg is a guarantor of the implementation of the company's business plan aiming to decrease the level of deterioration of fixed assets and eliminate the power grid capacity deficit. The merger of OJSC Lenenergo's power grid assets and the city-owned assets within the framework of one company creates additional potential for the improvement of the company's performance.

I.D.E. Electricity Distribution Investments 1 Ltd and VTB Bank, in cooperation with the management and other shareholders of the company, intend to carry out activities to improve the company's capitalisation and enhance the transparency of its operations.