Updated August 4, 2008

   JSC TransContainer business, the largest Russia’s container railway operator, is rather attractive for investors, therefore they will be interested in the company initial public offering (IPO). Such was the opinion of Troika Dialog analyst Kirill Kazanli, who commented the decision of JSC Russian Railways (RZD) directors’ board to hold TransContainer IPO in October current year.

   According to him, this company is engaged in containers transportation by railways, and this business continues to demonstrate favorable growth dynamics. "According to the data of FESCO transport group, container transportations grow by around 20% a year. And one of the largest transporters in Russia will for sure take part in this growth", as Kazanli said.

   He marked that unfavorable market situation will certainly influence IPO results, and this year it goes not as smoothly, as it would have been in autumn last year, but still the business interest will be quite high.

   Analysts do not eliminate that many companies that have infrastructure funds and focus on infrastructure projects will participate in TransContainer stocks purchase. This will be the second Russian railway asset proposed to IPO, after Globaltrans company that has successfully held IPO at London Stock Exchange this year. Judging by this placement, the western companies take great interest in such assets. Therefore, foreign investors as well can take active part in a deal of TransContainer stocks sell.

   As reminded Mr. Kazanli, RZD management had more than once declared that IPO would be held in two stages: first – in autumn current year on the Russian stock exchange, second – in 2009 on one of the foreign stock floors. "If not this year, than next one the foreign investors will take active part in TransContainer IPO", is sure Troika Dialog analyst.

   We will remind that on Friday, August, 1, JSC Russian Railways directors’ board affirmed sale of TransContainer stockholding within October current year. As reported in RZD before directors’ board meeting took place, would be considered parameters according to which no more than 20% of stocks of TransContainer authorized capital would be sold.

   Within press-conference held on July, 31, JSC RZD president Vladimir Yakunin confirmed that stocks of the subsidiary company could be proposed for IPO in 2008-2009. "We will examine the market situation and offer stocks when we find this rational from economic viewpoint", as he said. IPO managers are already chosen: Morgan Stanley, Troika Dialog Investment Company and TD Investments Limited. This decision was taken during annual stockholders’ meeting on June, 28, and its protocols were signed on July, 11, as it was said in TransContainer report. It is planned that within IPO the company can offer up to 2 778 955 stocks (20%) at RUR 1 000 nominal value. Minimal price per one stock totals RUR 2 974, and as a result the overall sum can attain no less than RUR 8 264,6 billion (around $ 350 million).

   Analyst of Renaissance Capital Investment Company, Edward Pharitov, had earlier commented the decision of the annual stockholders’ meeting, and marked that TransContainer had all opportunities to realize the task of getting such sum in terms of the current situation. Meantime, the analyst answered the question, whether the company could expect capitalization increase to $3,2-3,4 billion within IPO, as RZD representatives had declared earlier, and earnings growth to $680 million respectively, as saying that everything would depend on the market terms and on investors "appetite".
JSC TransContainer is JSC Russian Railways subsidiary, container operator. The company was established in March, 2006 on the basis of JSC RZD branch – the Center for Container Transport (TransContainer). Currently, the company operates the largest rolling stock in Russia (owns 23 000 container platforms) and park of multi-tonnage containers (48 000 units). Also, the company owns 47 terminals in all freight traffic centers of Russia.