Rothschild Wins Ukrainian Spin-off Tender

Financial advisers Rothschild has won the tender to supply investment banking services related to the unbundling of Ukraine’s gas transmission services, including inviting a qualified partner to manage the pipeline system, state monopoly Naftogaz said October 19.

The other bidder was Lazard Freres, which actually bid more than Rothschild’s winning level of hryvnia 98mn ($3.7mn) – about half the expected hryvnia 193.3mn.

Naftogaz said Rothschild had a lot of experience of advising on mergers and acquisitions in Europe's gas transmission sector.

As well as finding a partner to operate the pipelines, Rothschild will also evaluate the risks associated with spinning off the grid and find ways to reduce them. This will include structuring the deal and finding the key commercial conditions for it.

However, the final approval of the winning partner will rest with the country’s parliament and cabinet of ministers, which must also work out and approve the conditions for the tender.

Given the transport system's strategic importance to Ukraine – it can bring in over $2bn in transit fees annually from Gazprom – the government has always resisted attempts to spin off grid operations – or even to grant a concession to operate it – to third parties.

William Powell