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European Bank for Reconstruction and Development may purchase 5% of "Russian Railways" JSC

In the nearest years, the Russian Government is planning to sell 5% share of “Russian Railways” JSC (RR). Today, the authorities discuss the possibility of attracting European Bank for Reconstruction and Development (EBRD) as strategic buyer. It’s significant that the Russian Railways is a client of EBRD.

Before, Vladimir Yakunin, president of RR, announced that attraction of institutional investor would allow monopolist to prepare in the best way to the planned allocation in 2016.

According to a RR representative, Yakunin believes that Russian Private Equity Fund could co-invest with EBRD in the company, but the decision has not been made yet.

Konstantin Yuminov, analyst in Raffeisenbank, thinks that EBRD is the optimal candidate for the role of strategist for the monopoly. He reminds that the bank is a shareholder of a number of Russian transport companies. Particularly, EBRD owns 9.2% of “Transcontainer” and 3.7% – of FESCO.

Analysts remark that with a minority shareholder in the person of international bank, the RR will be able to improve corporate management and actively attract funds for realization of infrastructure projects.

According to estimates of Vladimir Yakunin, the RR President, 25% of the company cost 280 billion rubles. Thus, 5% of the RR may cost to EBRD 56 billion rubles. By 2016, Russian Government is going to realize 25% of the monopoly.

Currently, the Transportation Ministry of the RF is preparing amendments to the law that allow decreasing the share of the state in the RR by 25%. Privatization of the company may be held in two stages: in 2013–2014 5% share may be sold, and in 2015–2016 – 20% (through IPO).



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