February 4, 2013

American Energy Company AES Leaves Ukraine

Couple days ago I talked to my friend who is investment banker in Kyiv. He simply told me that foreign companies were leaving the domestic financial sector. My friend said: "Foreigners are running. Foreign capital is flying from Ukraine." Apparently, foreign companies are leaving not only banking industry but also energy sector. What causes a negative change in foreign investor's confidence? It's extremely high regime uncertainty.

According to the Yahoo! Finance news The AES Corporation (AES) has an agreement with VS Energy International to sell two of its power distribution businesses in Ukraine. The transaction is expected to close by mid 2013.The company will sell its 89.12% and 84.56% equity interest in AES Kyivoblenergo and AES Rivneoblenergo, respectively. AES Kyivoblenergo provides services to 881,000 customers in the Kiev region and AES Rivneoblenergo serves 412,000 customers in the Rivne region. Here is the rest of this story.

The AES holding power had $18 bln in revenues last year. Its net income, however, was negative, -$1.3 bln. Probably, the AES is just getting rid of bad equity. But what is VS Energy International?

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