icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm
29 Sep, 2008 04:28

Railways shunt into investment spotlight

As global financial markets shudder, some European state-owned railway majors are preparing to go private. Some of those taking part in the Innotrans International Exhibition in Berlin believe that railways are about to return to the limelight as an inves

Solid and stable. Railway firms believe that with global financial markets in turmoil, their growth outlook and potential return on investment make them very attractive to investors. Market fluctuations haven't spooked Europe's railway leader – Germany's Deutsche Bahn. Now state-owned, the company says it expects a railway renaissance and is going private this year. Bernd Weiler, International Communications Spokesman for Deutsche Bahn says rail is coming back into vogue

“For many many years, and decades, the road, was preferred in new infrastructure plans.  Now, you can see in the macro trend, it’s the time for rail.  But we have a lack of financial funds, and these funds we can get through an IPO, through the private market, and we don’t have to do it by the burden of the taxpayer.”

Deutsche Bahn plans to float a quarter of its stock, and Polish railways is considering selling most of its shares. State-owned Russian Railways says it is interested in buying 5% of Deutsche Bahn, but has postponed plans to list some of its subsidiaries for 3 years. Russian Railways President, Vladimir Yakunin says the delay is to ensure that it maximizes the value of its assets.

“We are not in such a critical need of money to sell expensive things cheaply. I'm not saying we are going to stop the selling process on the market, all I'm saying is we are going to sell expensive things for what they cost.”

Russia's investment into railways development up to 2030 will amount to nearly $560 Billion. Russian Railways are expected to contribute about 70% of that. The firm is already buying high-speed trains, modernizing tracks, renovating train stations, with more modernization plans still on paper.

The climate is right for trains, says the slogan of one of the producers at the exhibition. Leading railway companies say an aging society, high fuel prices and environmental concerns are playing into their hands. But only time will tell whether the world's second biggest railway network and one of Russia's last natural monopolies can manage to jump on that particular train.