Updated April 7, 2008

   The first IPO can take place in the Russian railway industry. Globaltrans, where N-Trans Group has selected the part of its business, has declared about the intention to place the stocks in London. It is planned to receive around $500 million for 30% stocks. This figure equals the company debt. IPO will be held on the background of the continuing crisis at the financial markets. And although Globaltrans is estimated at almost half-price than JSC TransContainer, which recent private offering of stocks has been successful, the investors can still insist on a discount.

   The statement about the forthcoming IPO was imported by the Cyprian Globaltrans Investment Plc, which comprises the part of N-Trans Group railway assets (former SeverstalTtrans) – OJSC Novaya Perevozochnaya Komaniya (NPK) and JSC SevtekhnoTrans. It is said in the statement that the company planed to pass listing in London by the end of the first half-year and offered 30% stocks to the investors – one part would be the additional emission, the other – the stocks of the current company coowners.

   Globaltrans does not expose the stockholding structure, but according to the investment banker aware of the offering procedure, 70% stocks of Globaltrans belong to N-Trans and the rest 30% – to the NPK management. It is indirectly confirmed by the prospectus of the NPK non-offered bonded loan dated 2005, where Cyprian Leverett Holding Ltd (70%) and Envesta Investment Ltd (30%) are indicated as Globaltrans stockholders. According to the investment banker, both N-Trans and NPK management would sell the stocks in proportion to their stakes.

   Globaltrans does not specify how much it plans to receive within the offering. In N-Trans refused to comment. Globaltrans does not also expose the financial indices, but mentions only the operating profit for 2007 that totals $127,6 million. The source specifies that the forecasted company EBITDA for is "over $200 million". Thus, according to him, the company has preliminary estimated itself at $1,5 billion regardless of the debt that totals around $500 million. The company plans to receive $500 million, "plus-minus $100 million", for 30% stocks.

   The price range of the offering would be determined in the mid-April, and the final price of the offering would be stated at the end of month. The source marks that the company has been estimated with the discount in relation to the analogues at the emerging markets, as the latter either own the railway infrastructure or use it on the concession basis. Nevertheless, it is also estimated with the discount to another Russian railway operator – JSC TransContainer. And JSC Russian Railways has completed the private offering of its 15% stocks in January. According to 2008 EBITDA, Globaltrans is offered with the 7,5 coefficient, while EBITDA of TransContainer was 12,4.

   N-Trans Group amalgamates more than 20 transport companies. The largest are OJSC Novaya Perevozochnaya Komaniya (NPK), OJSC Balttransservice (railway transport), JSC PetroLesPort, Vostochnaya Stevedoring Company LLC, JSC Vladivostok Container Terminal (port containers transshipment), Transit Cargo Trans LLC (auto transportations). The company management, which comprises Konstantin Nikolaev, Nikita Mishin and Andrey Filatov, owns 100% Group stocks. The previous year profit is not disclosed, but it has totaled $1,63 billion for 2006.

   N-Trans did not include the largest BalttransService among the railway assets offered at the stock exchange, which occupies the second place among the private operators at the market of oil and oil products transportations. The source marks that BalttransService is the highly specialized company, which park consists of cisterns only, and Globaltrans park comprises rather multi-purpose open cars. Moreover, oil transportations do not grow now, and investors buy transport securities on the assumption of growth prospect.

   Experts mark that N-Trans estimates itself rather modest. But it is sound if to take into account the continuing crisis at the financial markets, considers Michail Lyamin from Bank of Moscow. He marks that "it is not the time to hold IPO", even at the general interest to the transport assets. "The world stocks market has fallen down much as compared to December, 2007 (TransContainer has been offered then). "It is not favorable to offer now, in my opinion, while there is the risk that the slackened market will offer the price with the discount", agrees the director of corporate communications department of FESCO transport group (owns the main Globaltrans competitor – Transgarant company) Stanislav Vartanyan. FESCO also plans to hold IPO, but no sooner than 2009.