OAO Russian Railways, the state monopoly that sold $1.5 billion of Eurobonds in March, may consider selling shares in two years to raise non-government funds to expand its transportation network.
Russian Railways is worth “several times” its authorized capital of 1.5 trillion rubles ($48.4 billion), company President Vladimir Yakunin said in an May 28 interview in Sochi, the Black Sea resort that will host the 2014 Winter Olympics. The company may return to plans for an initial public offering no earlier than 2012, after selling stakes in units, he said.
The rail operator, whose tracks cover 85,200 kilometers (52,900 miles), asked the state to provide 448 billion rubles to 2015 for new projects to expand access to ports and boost trade, Igor Kolomeisky, head of investments, said on May 28 at the Sochi transport forum.
“We fulfilled the 2009 investment program, and we’ll carry out this year’s, too, but we have serious financing problems,” said Yakunin, 61, who has headed the company since 2005.
This year’s investment plan of 270.5 billion rubles should cover the “minimum needs” of the company and is earmarked for projects already under way, Yakunin said. Spending will rise to 285 billion rubles next year and 299.9 billion rubles the following year, according to data on the government’s website.
The monopoly is seeking additional funds to upgrade its rolling stock and to build a high-speed link between Moscow and St. Petersburg and tracks in northwestern and southern Russian, as well as potentially the Far East, Kolomeisky said.
The expansion is strategically important for the economy, Kolomeisky said. The economy of Russia, the world’s largest energy supplier, increased 2.9 percent in the first quarter, the first expansion since 2008.
Freight, the rail monopoly’s main source of income, may grow 3.7 percent to 5 percent this year, the company has said. Cargo shipments increased by 13 percent in the first five months from the year-earlier period, after falling 15 percent in 2009 to 1.11 billion metric tons.
Cargo growth, an indicator of the economy’s health, hasn’t returned to pre-crisis levels, Yakunin said. The debt burdens in Europe and the U.S., and continuing high unemployment rates in the U.S. or Germany may hinder growth, he said. “All this shows that the economy hasn’t recovered.”
Russian Railways may consider an initial public offering after completing structural changes to the railroad system by 2012, Yakunin said.
In the final stage of the reforms, the company intends to raise as much as 100 billion rubles selling stakes in units such as OAO Freight One and OAO TransContainer, two of Russia’s largest rail shippers. The sales may start in 2010.
“We are absolutely confident that we’ll be able to sell as much as 35 percent of TransContainer this year,” Yakunin said.
The company may sell 25 percent of OAO Freight One to a strategic investor after selling a stake of the same size in an IPO to establish the company’s market value.
Vladimir Lisin, the billionaire chairman of OAO Novolipetsk Steel, is interested in buying the strategic stake in Freight One, Kommersant said yesterday. Lisin’s press service declined to comment when called by Bloomberg News. According to Forbes magazine, Lisin is Russia’s richest man with a fortune of $15.8 billion.
The Freight One IPO will depend on whether the government accepts a proposal from London-traded Globaltrans Investment Plc to buy as much as 50 percent of Freight Two, which Russian Railways is setting up to encourage competition in the market, Yakunin said. If that deal goes through, the competition watchdog won’t demand that Russian Railways sell a controlling stake in Freight One, he said.
Globaltrans is examining how to strengthen its position on the freight market, Anna Vostrukhova, head of investor relations, said by telephone.
Translation of the article: РЖД может рассмотреть возможность IPO через 2 года - Якунин