Globaltrans starts trading on LSE after IPO raises $449m

By bne IntelliNews May 8, 2008

Heiner Klemm in Berlin -

Russia's largest privately owned freight rail operator Globaltrans (GLTR), second only in number of wagons to state-owned Russian Railways, will start unconditional trading Thursday, May 8 on the main board of the London Stock Exchange (LSE) following a successful IPO April 30, which valued the company at some $1.55bn.

Despite tough market conditions, Globaltrans placed some 34m GDRs, representing 29% of its stock, at $13.25 per GDR. The IPO attracted strong demand from institutions, placing the GDRs bang in the middle of the planned price range and raising $449.4m. The joint bookrunners, Deutsche Bank and Morgan Stanley, have an option to sell a further 2.9% in the company at $13.25 per GDR within 30 days of the initial placement.

"The success of our offering shows that investors recognise the great potential of the Russian rail freight industry," says Globaltrans CEO Sergey Maltsev. "The offering has given us access to the capital we need and we will now move forward with the implementation of our investment plans, enhancing our opportunities for growth and value creation."

Well trained

Globaltrans, established in 2001, has built up a fleet of 21,000 wagons and 19 locomotives to become the leader of a new breed of freight operators that sprung up as a result of Russian rail sector reforms, which opened up the profitable freight segment to the private sector in 2003. The company's fleet has an average age of less than four years and is tailored towards higher-margin cargos, serving many of Russia's top industrial groups in the oil and metals sector, such as Lukoil, Severstal, Evraz, Rosneft, MMK, Ural Steel and Ritek.

Globaltrans, majority owned by N-Trans (formerly known as Severstal-Trans), already has some 400 hoppers for carrying construction materials and, according to Maltsev, plans to expand further into this niche to tap into the current double-digit growth of Russia's construction market.

The whole rail sector is set for further rapid growth, as developing the country's decrepit transport infrastructure is one of the Kremlin's top priorities. Russia's Minister of Transport Igor Letvin in March outlined plans for public and private investment of a colossal RUB9 trillion, about $380bn, into infrastructure and rolling stock by 2015.

If the success of FESCO, Russia's only other publicly-listed company in the rail freight sector, is anything to go by, then Globaltrans investors can expect a healthy return. In the last year alone, FESCO has seen its share price more than double.

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Globaltrans starts trading on LSE after IPO raises $449m

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