VTB to sell Freight One by year's end to unnamed buyer

MOSCOW. Dec 5 (Interfax) - VTB will sell railway logistics company Freight One before the end of the year to a buyer who will remain unnamed for the time being, the head of the Russian state bank, Andrei Kostin said.

"This year. [...] We will exit before the end of the year, I can't say at this point to whom [Freight One will be sold]," Kostin told reporters on the sidelines of the Russia Calling! forum.

Kostin announced in early September that the bank had bought Freight One. "We've already bought [Freight One]. We generally have a principle that we try not to hold on to noncore [assets] for long, so now we'll see. For now it's ours, the management there is also ours. There was a large loan," he said at the time.

He said it was a cash deal. When asked what VTB planned to do with Freight One, he said "we'll see, we'll look for the most efficient forms."

VTB First Deputy Management Board Chairman and CFO Dmitry Pyanov said in late September that the bank does not consider Freight One to be a strategic asset and that it plans to divest the company within a few quarters.

"Unfortunately, I am limited in communication on how much we have paid for it, from whom we bought it, to whom we will sell it, and for how much we will sell it. However, I had to indicate that the asset is essentially being held on the group's balance sheet for a very limited time, because many people have the incorrect understanding," Pyanov explained at the time.

JSC Aurora Invest bought Freight One from NLMK owner Vladimir Lisin in November 2023. Aurora Invest's owners have not been disclosed. Newspaper Kommersant, citing sources, said this was a group of investors that included brothers Timur and Ruslan Babayev, the owners of Vector Rail, which owns liquefied petroleum gas hauler SG-Trans. The Babayevs are the sons of former Russian Railways (RZD) vice president Salman Babayev, chairman of Freight One's board of directors. Ruslan Babayev served as Freight One's CEO at the time. The company is now headed by RZD veteran Oleg Romanov.

Kommersant's sources estimated the price of the deal at about 220 billion rubles. Some estimates were higher. Aurora Invest's financial statements show that it spent 243 billion rubles in 2023 on the purchase of shares or equity stakes and received a comparable amount in credit and loans.

Freight One was established in 2007 and spun off from RZD as part of railway sector reforms. A stake of 75% minus two shares in the company was sold to a Lisin-controlled company in 2011 for 125.5 billion rubles and in 2012 the billionaire's holding company bought the remaining shares from RZD for 50 billion rubles, consolidating 100% of Freight One.

Freight One now has about 90,000 units of rolling stock, primarily gondola cars and boxcars, as well as well cars. Freight One topped the Infoline Rail Russia ranking of freight rail operators in the first quarter of 2024 by both freight traffic and turnover, with 29.8 million tonnes and 60 billion tonne-km. By number of owned and operated railcars, Freight One ranks behind RZD-controlled Federal Freight and Demetra Holding.