OREANDA-NEWS. July 2, 2007. “Today, on June 29, 2007, we have taken the long-awaited decision to establish an open joint stock company, the First Freight Company, which will be valued at a minimum of USD5 billion. The Company’s production activity will become more transparent and allow us to scrap cross-subsidies, which in turn will enable us to attract additional financing to renew rolling stock and improve the infrastructure,” said Alexander Zhukov, Chairman of the Russian Railways Supervisory Board and Russia’s First Deputy Prime Minister.

Vladimir Yakunin, president of Russian Railways, noted that today’s decision was strategically important for the Company.


The First Freight Company will be headed by Salman Babayev, vice president of Russian Railways.

Russian Railways will be the main founder of the company and hold 100% of the stock minus one share. The non-commercial organisation ZhelDorReforma will hold one ordinary share in the First Freight Company as a second founder.

The First Freight Company will be established as an operator of rolling stock. Russian Railways will retain its status as a shipper and will fulfill its obligations as laid down by Russian transport legislation.

According to Salman Babayev, vice president of Russian Railways, the First Freight Company will receive about 200,000 mostly specialized freight wagons, such as “cisterns, cement and mineral carriers and batch meters, but we will also have around 75,000 general purpose open box cars. The main principle is that we will take only that part of the fleet which has real competition on the market. In addition, specialized shipments yield higher returns and we already know very well that limited circle of clients that need this kind of service.”

Some of the wagons which will become part of the charter capital of the First Freight Company will continue to be used by Russian Railways during the transitional period.

In the medium term, it is envisaged that part of the First Freight Company’s stock will be sold through an Initial Public Offering (IPO), with the funds raised going towards financing infrastructure at Russian Railways.

Preliminary valuations of First Freight Company are at least USD 5 billion, but the worth of the company at the IPO will depend on its results.