Russian rail to invest in Deutsche Bahn

Posted on October 13, 2008 by Matthieu Desiderio

The intention of Russian Railways (RZD) to inject capital into Deutsche Bahn (DB) following the partial DB privatisation is everything but secret. Vladimir Iakounine showed his interest as soon as the privatisation was announced.

In an interview to Herald Tribune, he stated that RZD would like to own about 5% of the DB’s capital. From his viewpoint, this venture is a way to reinforce partnerships between both companies which already collaborate on several projects. More specifically, the DB and RZD work together to move freight trains from China to Hamburg. Also, the DB had shown interests when the Moscow-Saint Petersburg line construction started and Siemens had even provided RZD with some high-speed trains. Both rail companies have also worked in collaboration on various cross-border schemes.

On DB’s hand, partnering with RZD offers good development perspectives, since the Russian tracks network is going to be substantially developed. The overall investment program allocates indeed €400 billion until 2030 for rail infrastructure development. In this way, the DB expects to capture some of the freight traffic from Asia which keeps growing considerably.

Financial crisis: a good time for a stock market introduction?

Introduction of the DB on the stock market is planned for October 27, 2008. On that day, 24.9% of the DB capital will be proposed on the German stock market to private and public investors. Outside Germany (except in the USA where no stocks will be proposed at all), stocks may be available for some institutional organisations. Note that a public offering without listing is planned in Japan.

Unfortunately, the current worldwide financial crisis is may affect the amount of funds levied with the privatisation. Some financial experts fear that the introduction onto the stock market would yield no more than €5 billion, which would result in a 10% loss. The German State and the DB are afraid that a too little amount of stocks would be sold. Both parts agree that the DB should not be dumped. Therefore, one figure out that if the amount of investments is not deemed significant enough, the privatisation process would possibly be merely called off; which would be a shame after the DB already invested between €50 to €60 million in its privatisation promotion. Adding up banks and consultants services the total amount would reach €100 million.

Germany: A (still) growing rail market

Yet, German rail freight market keeps growing. During the first 2008 semester, 189.8 million tons were carried on German railways, representing a rise by 5.4% compared to the same 2007 period. The total traffic amounted 59.7 billion ton-kilometre (+3.4%) run on a 315km long average distance (320km in 2007). Container traffics have experienced a considerable growth by 13.2% (respectively 13.4%), reaching 16.9 billion ton-kilometres (34.1 million tons) and have roughly represented 18.0% of total rail freight traffic in tons. Overall, 3.1 million TEU were carried from January to June 2008 (+12.1%) and the average distance covered only slightly decreased by 1.0% to reach 497km.

The growth of the German rail freight is impressive and encouraging, especially when contrasted to the situation of French freight rail sector. Many reasons can be outlined: the DB continuous development, the collaboration of ports and rail operators, a consistent network, the amount of exports, etc. Also, another driver – often forgotten – lies in the global congestion on German roads which definitely contributes to make of the rail a viable transport option.

References

Article: La société nationale des chemins de fer russe planifie une prise de participation dans le capital de la Deutsche Bahn, Agence France Presse, Sep. 26, 2008
Article: La crise financière diminue le prix des actions de la Deutsche Bahn, Financial Times Deutschland, Sep. 26, 2008
Article: L’entrée en bourse de la Deutsche Bahn prévue le 27 octobre 2008, Eurailpress, Sep. 26, 2008
Article: La privatisation devrait coûter plus de 100 millions EUR à la DB, Stuttgarter Zeitung, Spe. 15, 2008
Statistics: Güterverkehr auf der Schiene nimmt weiter zu: here
Website: Russian Railways: here