Shares digital

SHARES RATING

Globaltrans Investment 1 (low)-5 (high)

Management: 3

Market: 4

Product: 4

Financial strength: 3

TOTAL SCORE: 14/20

In a bid to take advantage of the ever-growing demand for rail freight services in Russia, freight rail operator Globaltrans Investment has announced plans to list on the main market later this year.

The group intends to launch an initial public offering of global depositary receipts (GDRs), with the offering representing around 30% of total company shares and consisting of both primary and secondary components.

Globaltrans is currently the second largest freight rail operator in Russia after Russian Railways and its affiliates, including Freight One, by number of rolling stock operated. The company provides rail freight transport and logistics services, as well as certain ancillary services to large industrial customers and medium-sized corporate customers in Russia. In addition, it carries customers’ cargos throughout Russia and Ukraine. Key customers include member companies of several large Russian industrial groups active in metals and mining, oil and oil products and other major constituents of the Russian economy, such as Lukoil and Rosneft Severstal.

Rail transport is the leading mode of freight transportation in Russia, with around a 93% market share by volume in 2006, and is growing rapidly, partly thanks to firmly established economic growth. The Russian railway system is the second largest in the world behind the US, and is the third largest in the world by volume of rail freight after the US and China. The Russian government is committed to the development of the rail sector, and railway infrastructure improvements are a national priority, with investment of more than $35 billion planned for 2008-10.

Details of how much the group plans to raise were not disclosed, but the proceeds will be used to fund Globaltrans’s current capital expenditure programme for 2008, including the purchase of additional rolling stock. Up to $50 million of gross proceeds will also be used to repay outstanding debt and for general corporate purposes. Although the group has yet to specify exactly when it will float, the IPO is due to be completed by the end of the first half of this year.

‘I am confident that the planned offering will give us greater access to capital and enhance our opportunities for growth and value creation in this very exciting time for the industry,’ says chief executive Sergey Maltsev.

Deutsche Bank has been appointed as Global Coordinator and Deutsche Bank and Morgan Stanley as Joint Bookrunners.