FINLAND: Nurminen Logistics has signed an agreement to purchase the Finnish activities of Operail, the Estonian state freight operator which is divesting its non-core activities.
Subject to Finnish regulatory approval of €27·7m sale and purchase agreement announced on January 13, the entire share capital of Operail Finland will be bought by North Rail Holding, which is owned by Nurminen Logistics (79·8%) and investors (20·2%).
Operail Finland began freight services in November 2020, following from state incumbent VR and private operator Fennia Rail.
It has nine 1 524 mm gauge Wabtec/Tülomsaş PowerHaul main line diesel locomotives and one C30-MF shunter, and hauls about 5 million tonnes/year. ‘We were, and still are, the first company to offer serious competition in the Finnish railway sector’, said Operail Finland CEO Ilkka Seppänen.
Operail CEO Raul Toomsalu said the new owner would receive a ‘well-managed and fully operating’ company with considerable volumes and strong prospects for future returns.
‘Operating in Finland has provided invaluable experience to Operail as a company and an opportunity to bring together the best knowledge and practices from the markets of different countries’, he said. ‘We have trained Finnish employees in Estonia and Estonian employees have visited Finland to learn how things work there.’
No changes are planned to daily operations and there will be no impact on the more than 40 staff.
Nurminen said the acquisition would support the development of its rail business, open new opportunities for co-operation with Nordic and central European railway operators, and would facilitate the future development rail traffic between Finland and Asia.
Nurminen expects this to significantly increase sales and operating profit from 2023.
Operail stressed that the decision to sell was not related to Russia’s full-scale invasion of Ukraine, but had been taken in May 2021 because the government felt ‘it is not strategically necessary for the Estonian state to do business in other countries’, where ‘business is thriving in the free market, in the hands of private owners. ‘
However, the war has affected the sales process. Operail said the ‘overall market situation for 1 520 mm gauge railways deteriorated significantly in 2022’, and instead of selling an initial 51% stake it was decided to completely and promptly exit the Finnish market.
‘It has been a very complex sales process’, said Toomsalu. ‘In spite of a completely unpredictable environment, the people of Operail have been working almost around the clock to meet the guidelines of the owner. While at first, it was uncertain whether we would be able to sell the company at all or whether we would have to close it down and sell the assets, the better scenario worked out in the end’.
Separately, Operail’s Ukrainian lease fleet of 552 wagons was sold to a joint venture of local investor Fortior Capital and Estonian wagon leasing company Teslar Trans for €6·51m last year, and a sale process is underway for Operail’s remaining 2 000 wagons outside Ukraine, as well as its workshops.
