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Railroad Privatization

DW staff (jen)May 21, 2008

Russia's state railroad is the first company to show serious interest in buying a stake in German railroad Deutsche Bahn, which is to be partially privatized this year.

A conductor gives a green flag to a DB train
Will Deutsche Bahn approve a purchase by Russia's RJD?Image: AP

The head of Russian state-run railroad RJD, the world's second-largest railroad, has acknowledged that his company is mulling a stake in Deutsche Bahn.

"[A share purchase] is a good idea and we are going to talk about it," RJD Chairman Vladimir Yakunin said on Wednesday, May 21, during a meeting with high-ranking German rail officials, including Deutsche Bahn chief Hartmut Mehdorn.

Sale process is still young

"It is too early to talk about this but it would be good for the state to support good investments when the opportunity arises," Deputy Prime Minister Alexander Zhukov told Russia's Interfax news agency.

Hartmut Mehdorn, Chairman of the German railway company Deutsche Bahn AG, smiles during the annual balance press conference in Berlin, Monday, March 31, 2008.
Mehdorn opted not to speak outImage: AP

Mehdorn also apparently thought it was too early to discuss the matter. He made no comments about the sale possibility, and his German spokesman refused comment to Interfax.

German Finance Minister Peer Steinbrueck also did not comment on a possible sale to RJD.

Deutsche Bahn's sale process just getting under way. At the end of April, the German government finalized plans for the partial privatization. Passenger and freight traffic will be up to 24.9 percent privatized under the name DB Mobility Logistics, a move that is expected to bring in between 4 billion euros and 8 billion euros ($6.5 billion to $13 billion ). The sale could take place as early as this autumn.

Concern over Russian role

According to the Financial Times Deutschland newspaper, the railway wants to sell most of those shares to large institutional investors. But some potential buyers are skeptical about the state's role in the deal.

A purchase by a Russian state-owned company would likely further fan the skepticism and concern of potential institutional shareholders, and politicians could also frown on the deal.

Yakunin's ties to Putin

RJD chief Yakunin is a close confidant of Russia's ex-President and current Prime Minister Vladimir Putin.

At the same time, the Deutsche Bahn works closely with RJD. Last year the two companies founded Trans-Eurasia Logistics, in a bid to simplify container transport between Europe and Russia.