Ukraine plans IPO for Ukrzaliznytsia

The chairman of Ukrainian Railways, Yevhen Kravtsov, and the EBRD Director for Eastern Europe and the Caucasus, Matteo Patrone, signed a MoU to prepare an IPO for Ukrzaliznytsia.
Under the agreement, the two sides will cooperate on the analysis and preparation of potential decisions on separation of business entities in the IPO process, analysis of the reform of the legal and regulatory support, evaluation and strengthening of corporate governance practices.
“The preparation for the initial public offering of Ukrzaliznytsia shares is an important message for the global community about Ukraine’s readiness to reform the public monopoly. Ukrainian Railways is the first Ukrainian state-owned company planning to enter the foreign stock market, thereby enhancing the country’s investment image,” Vladyslav Kryklii, the Minister of Infrastructure said.
The decision was made to attract financing for the implementation of Ukrzaliznytsia’s ambitious investment programme and to effectively implement the Ukraine Action Programme goals set by the Cabinet of Ministers.
The railway development progamme envisages the improvement of rail transport services, the modernisation of the infrastructure and rolling stock upgrade projects.
“Investments are necessary for the implementation of strategic projects, the development of the railway industry as a whole. A key advantage of going to an IPO is that it will increase the transparency of the company, as it is a mandatory requirement. The IPO start for us is the recognition of the results of work. It is really significant that we became the first state company of Ukraine, which made the real steps on the public equity offering,” Yevhen Kravtsov.
According to Kravtsov, the IPO process will take 1 – 3 years, depending on the speed of decision making and implementation of the legal basis for the transaction.
Under the IPO preparation stage, it is necessary to determine the strategy of placement of shares and the transformation of the company, to outline possible options for pre-IPO financing of the EBRD, to select the international stock exchange, the list of necessary legislative initiatives. In addition, the establishment of long-term investment goals according to the government Action Plan is needed.
Currently, USD 6 billion is the value of Ukrzaliznytsia’s capital investment need for the next 5 years. In the next 2 years, the company plans to generate USD 2.2 billion from its own funds and can obtain USD 2 billion funding from international financial institutions under the current and new credit agreements. A possible IPO is expected to raise a total of USD 3 billion.


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