Georgian Railway, the Caucasus state’s railway monopoly, has announced that its share capital is set to be valued at between $800m and $1bn when trading starts this month on the London Stock Exchange.
The company, the only state-controlled railway monopoly worldwide to have sought public listing, announced last month that it planned to seek a London listing for global depositary receipts representing 25 per cent of its shares.
Georgian Railway has said it is one of the world’s most profitable railway operators, although the sector’s lack of transparency makes it difficult to verify the claim.
On Wednesday it set the price range for the issue at $15.25 to $19 per GDR, which represents 20 shares. The range would give the GDRs a market value of $200m to $250m and the shares overall a value of $800m to $1bn. Trading is expected to start on May 24.
Irakli Ezugbaia, chief executive, said Georgian Railway was uniquely positioned because of its status as a statutory monopoly that also had the right to set prices as it chose. About 95 per cent of last year’s $286m revenues came from moving freight. The company posted earnings before interest, tax, depreciation and amortisation of $156m and net income of $104m. It intends to pay out 60 per cent of consolidated net profits in dividends.
“We look forward to meeting prospective investors and sharing with them our plans to capture the considerable further growth and development opportunities we see for our business in the region,” Mr Ezugbaia said.
Georgian Railway said in April that it was listing as an integrated operator of both track and trains to mimic the structure of large, publicly listed North American railroads, such as CSX Corporation and Union Pacific. The companies own their track, locomotives and wagons, instead of dividing the infrastructure and operations as normally happens in the EU.
The former Soviet Union, with its long distances and big production of commodities, has some of the biggest proportions of goods movement by rail. Georgian Railway benefits from moving oil produced in Kazakhstan and Azerbaijan towards western Europe.
Two other railway operators – Globaltrans, a private Russian rail freight operator, and TransContainer, the container arm of Russia’s state-owned rail company – are listed in London. Both, however, operate only trains on Russia’s rail network, which is being gradually opened to competition.