The company aims to take advantage of liberalization trends in the Russian freight market, exemplified by the sale last year of a controlling stake in Russian Railways' rail cargo operator Freight One to tycoon Vladimir Lisin.
A decade ago, cargo owners relied on state-owned monopoly Russian Railways as the main fleet operator, but now more than 70 percent of the country's freight rail fleet is privately owned, according to a recent presentation by Globaltrans.
"We think investors like Globaltrans' story and the company should be able to place shares towards the upper end of the (company's target) range," wrote Renaissance Capital's Ivan Kim in a research note. "Globaltrans has good growth opportunities both via M&A and organically."
Globaltrans said it would raise the $450 million by issuing global depositary receipts (GDRs) in a range between $16.00 to $17.25 per share.
Of the shares to be issued, $400 million worth will be sold by the company and $50 million by major shareholder N-Trans, a privately-owned transport group which trades as TIHL and which is controlled by three tycoons.
TIHL's owners Nikita Mishin, Konstantin Nikolaev and Andrey Filatov are self-made billionaires with a net worth of $1.3 billion each, according to Forbes magazine.
Under an over-allotment option, underwriters can purchase up to an additional $50 million GDRs at the offer price. Following the share sale, the company's free float will rise to 48 percent from 35.31 percent.
Expansion Opportunities
CEO Sergey Maltsev said in a statement the rail wagon market is "ripe for consolidation" and that the company is well positioned to capitalise on the situation.
Globaltrans in April agreed a deal to buy the railcar unit of iron ore miner Metalloinvest for $540 million and has also been increasing its purchases of railcars.
Other assets are also coming on the block. Evraz, Russia's largest steelmaker, recently said it may sell its transport asset Evraztrans.
"The company will likely use the $450 million to buy captive wagons from a metals producer," analysts at Bank of AmericaMerrill Lynch said in a research note. "We think the company could buy about 5,000 wagons with such a sum."
Globaltrans said previously it had 7 percent of overall cargo volumes in Russia, the world's largest country by territory, which relies on rail to deliver oil products, grain and steel to its home and export markets.
The company's capital raising will be one of the few by Russian companies this year. Depressed markets and the eurozone crisis have limited the ability of companies to raise money.
Globaltrans, which went public in 2008 at $13.25 per share, raised cash via a secondary offering to buy a controlling stake in BaltTransServis in 2009.
The company also said first-quarter net profit rose 25 percent to $94.6 million on revenue up 3 percent at $452.6 million.
Deutsche Bank, JPMorgan, Morgan Stanley, and Troika Dialog are acting as joint global coordinators and joint bookrunners for the share offering, the company said. (Reuters)
