Government backtracks on size of Russian Railways sale

According to Russian business daily Kommersant (26 October 2012), the government has now decided to sell 5 per cent of Russian Railways through the private placement of a shareholding in 2013.

Back in June the government had announced plans to sell 25 per cent of the state railway operator, only to backtrack following opposition to the move from the management of Russian Railways. The Ministry for the Economy still hopes that the sale of such a small interest will make the company more transparent and provide some insight as to the valuation of 100 per cent of the rail operator.

However, this would appear hard to do based on the sale of such a small interest and the risk of subsequent share dilution in the event of any further share issues. At the same time, this move may help to clarify the core functions of the rail operator going forward – at present Russian Railways is involved in both infrastructure development for the railway sector and also passenger and freight operator.

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