The Ministry of Infrastructure, the Ukrainian Railways joint-stock company (JSC Ukrzaliznytsia), and the European Bank for Reconstruction and Development (EBRD) have signed a memorandum of understanding on cooperation on preparation for an initial public offering (IPO) of Ukrzaliznytsia shares.
Ukraine’s Minister of Infrastructure Vladyslav Kryklyi announced this, the CFTS portal reports.
Kryklyi, Ukrzaliznytsia’s Board Chairman Yevhen Kravtsov, and EBRD Managing Director for Eastern Europe and the Caucasus Matteo Patrone signed the memorandum in the presence of EBRD Vice President Alain Pilloux at the “RE:think. Invest in Ukraine” investment forum.
"The preparation for Ukrzaliznytsia’s initial public offering is an important signal to the international community that Ukraine is ready to reform the state-owned monopolist. JSC Ukrzaliznytsia is the first Ukrainian state-owned company that plans to enter the foreign stock market and thereby increase the country's investment image," said Kryklyi.
According to him, the IPO will allow JSC Ukrzaliznytsia to access capital from a wide range of investors, improve its liquidity, and allow an objective assessment of its value.
"The company plans to independently generate about USD 2.2 billion for investment purposes in the next five years. Additionally, Ukrzaliznytsia could raise up to USD 2 billion from international financial institutions under current and new loan agreements. The proposed IPO is expected to raise a total of about USD 3 billion, which is about half of JSC Ukrzaliznytsia’s requirement in capital investments over the next five years," said Kravtsov.
As the CFTS portal reported, Kravtsov said on October 3 that the exclusion of Ukrzaliznytsia from the list of enterprises that are not subject to privatization would allow the company to attract major investors and launch an IPO.
The parliament adopted the draft law No. 1054-1, which abolished the list of state-owned companies not subject to privatization, including Ukrzaliznytsia and the Ukrposhta postal company, on October 2. According to Ukrzaliznytsia, the law lifted the ban on privatization of more than 60 rail transport enterprises and infrastructure, which became part of the Ukrzaliznytsia joint-stock company as a result of its reorganization in late 2017.
Kravtsov recently said that an IPO was one of the possible ways of developing Ukrzaliznytsia: “My vision for Ukrzaliznytsia is orientation toward an IPO, sale of part of its shares on the open market in a way in which the state will retain control of the key asset while attracting private investors who would provide money for development of the company."
