Today the Frontier Centre for Public Policy released an independent valuation of SaskEnergy, Saskatchewan’s provincial Crown natural gas distributor. The report authored by financial analyst Ian Madsen estimated the potential market value at an average of $1.164 billion based on three key metrics.
Using established financial analysis methods, the valuation study analyzed several privately traded peer companies including two Canadian regional gas utilities and 11 regional US companies. The analysis found that the firm’s current potential public listing value could be between $818 million and $1.241 billion.
Madsen notes several potential benefits of privatization: “Proceeds from any SaskEnergy sale could lower taxes, reduce the government’s current or future debt, be used for needed spending priorities, be used to rationalize government and reduce costs or be added to the assets the government entrusts to its pension asset manager.”
There are currently no plans to sell SaskEnergy, but the Frontier Centre’s analysis is intended to determine what the potential value of the SaskEnergy assets to give citizens and the provincial government an idea of the revenue potential should the explore that option.
“While it is possible that the citizens, taxpayers and government of Saskatchewan would be better off and better served if SaskEnergy were to become part of the private sector marketplace, this study is just confined to estimating the value that Saskatchewan could accrue by doing so,” said Madsen.
Ian Madsen, CFA, the consulting analyst for the study, is an independent investment valuation analyst and knowledge process outsourcing expert, whose career has included being the research director for Zacks Research Digest in India; publishing an investment advisory publication, Ruminations; managing investment portfolios; financial education; and developing financial models.
Details of the study are available here: http://archive.fcpp.org/posts/valuation-analysis-of-saskenergy