Russia May Sell 5% RZD Stake in IPO in 2013

The Russian government may privatize a 5 percent stake in rail monopoly Russian Railways (RZD) in an initial public offering (IPO) in late 2013, Deputy Transport Minister Alexei Tsydenov said on Tuesday.

“I believe this will be in the form of an IPO and closer to the end of the year,” Tsydenov said on the sidelines of the Russian Congress of Transport Operators.

Russia’s Economics Ministry came up with a proposal last week to privatize up to 5 percent of the rail monopoly in 2013. Ministry head Andrei Belousov said this pilot privatization was important because it would provide a market valuation of RZD’s assets.

In June 2012, the Russian government approved a final privatization plan for major state assets, under which 25 percent minus one share in RZD was slated for sale in 2012-2013. But company CEO Vladimir Yakunin said sale of 25 percent minus one share in 2012-2013 was unrealistic due to unfavorable markets and the need to carry on with the rail giant’s reorganization to 2015.

Yakunin said a partial privatization of RZD was advisable after 2015.

The Independent reported in August RZD was eyeing a London float in a partial-privatization that would value it at more than 1.7 trillion rubles ($53 billion).

“Russian Railways, whose assets include 85,200 km of track, 1 million employees and 1 billion passenger-trips a year, is planning to sell as much as a quarter of the business in 2015 or 2016 through a share listing,” the paper said.

Yakunin told the paper at the time London was his preferred location for the IPO, after Trans Container, a subsidiary container-handling operation, was floated there in 2010.

“We have been working in London for many years and we are known here in this market. My personal position is that there is a supportive case for placing the shares of the mother company here in London as well,” Yakunin said.


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