Georgia to end railway monopoly with London IPO

Reuters is reporting that the government of Georgia plans to sell as much as a quarter of its stake in the state railway monopoly in a London-based initial public offering (IPO) expected to bring in up to $250 million USD. The government hopes to fund future development and boost the company's international profile.

On Wednesday, Georgian Railway set a price range of $15.25-$19.00 USD per global depositary receipt for the listing, valuing it at $800 million to $1 billion. Books are expected to close on may 23, with a market debut scheduled for May 24. The company has already held three days of investor meetings, attended by Prime Minister Nika Gilauri.

Georgian Railway has spent the past month marketing its offering to investors, around twice as long as usual, to collect feedback and improve its chances of success, Reuters quotes a source close to the deal as saying.

The Ministry of Economy and Sustainable Development has yet to make any official statement concerning the sale.

Economic analyst Lado Papava believes that the decision to sell Georgian Railway assets on the London Stock Exchange now is poor timing, due to threats from Russia. "My advice to the government is not to take this step. We should remember that two years ago Russia bought an Armenian Railway package [and] renamed it the South Caucasian Railway. This means that Russia has ambitions to control not only Armenian railways, [but] the complete Caucasus," he said. Calling Russia "an enemy that does not hide its purposes," Papava believes the railway is too strategically important and the government should refrain from privatization.