ESTONIA: The government has formally launched a two-stage process to privatise national rail freight operator Operail.
The public auction approved by the cabinet on June 6 will cover Operail’s entire business, including freight operations, rolling stock repairs, all contracts and the brand name.
It is being managed by LHV Group’s investment banking unit, with law firm Ellex Raidla providing legal advice.
Expressions of interest are invited by June 21. Potential bidders can review an initial information package and submit non-binding offers. They must be able to demonstrate genuine interest and the capability of making the purchase, and sign a non-disclosure agreement.
Investors which qualify for the second stage will then be able access additional information enabling them to submit binding offers.
‘Strategic opportunities’
‘We approach privatisation with a positive outlook’, said Operail board member Merle Kurvits on June 7.
‘The past years have been challenging for the railway sector and the economy. While overall freight volume on the Estonian railway decreased by 39% last year, Operail’s volume decreased by almost 70%, for unlike our competitors, Operail ceased freight transportation to and from Russia and Belarus. Nevertheless, we have maintained the largest market share in freight transportation on the Estonian railways.’
Kurvits said ‘the buyer will acquire a highly competent operational company with good future potential, strategic opportunities for expansion and profit generation’.
Reprivatisation
An initial privatisation saw Estonia’s national freight operations sold to the Baltic Rail Services consortium of international rail investors in 2001.
Following an acrimonious dispute over access charges, the business was bought back by the state in January 2007.
EVR Cargo was formed in 2009 as a subsidiary of national railway holding company Eesti Raudtee.
In 2018 EVR Cargo was renamed Operail as part of a strategy to move away from being solely a rail operator, and it expanded into international wagon leasing and freight operations in Finland.
In 2021 the government decided to divest activities which it deemed not strategically necessary for the state, and the lease fleets and Finnish business were sold by early 2023.
In autumn 2023 the government told Operail to draw up plans for a sale of the remaining business segments, and plans for privatisation were announced in February this year.
