Analysis of Possible Outcomes of RZD JSC 25% -1 Share Sale in 2012-2013


IPEM experts carried out SWOT-analysis of possible sale of infrastructural company’s shares in 2012-2013. Experts analyzed impact of privatization on the main stakeholders: state, freight owners, passengers, RZD JSC and investors. Note that these assumptions were not used for the analysis:

• Models of public offering: IPO, private offering, trading etc.
• Sale of shares with or without additional issue
• Potential state burden on investor


Key findings

1. Sale of 25% -1 RZD JCS shares is undesirable for state, passengers and freight owners. RZD JSC may benefit from the privatization if the state makes all necessary preparations.

2. The most desirable privatization model is the sale of shares to a strategic investor. Implementation of this model will help to accomplish all tasks formulated in the privatization program. Although taking into consideration governmental intention to develop competition among several operators, public offering of RZD shares contradicts international experience as RZD JLS is a single economic entity which owns rail infrastructure for general use.

3. If according to RZD JSC charter shareholders’ meeting remains responsible for the decisions concerning amendments to the registered capital, in case of selling 25% -1 RZD JCS shares the state will still be able to freely contribute funds to the registered capital in order to finance infrastructure development projects.

4. It is necessary to thoroughly analyze possible positive and negative effects of selling RZD JSC stock of shares. And if the decision to start privatization is made then it is necessary to put off the sale of shares to 2015 in order to make necessary preparations for company’s public offering.


Estimated impact of different models of privatization on Government’s tasks accomplishment


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