Operail sold another batch of wagons

Added on 25.01.2023

Operail Leasing has sold 807 rental wagons. ATASU Group from Kazakhstan and Skinest Rail from Estonia proved successful in the auction, with rental wagons for a total of 22.1 million euros sold to these companies.

The opportunity to take part in the auction of Operail Leasing, a subsidiary of Operail, was introduced to more than 40 companies. Twenty interested parties submitted their tenders in the different phases of the process. Analysing the tenders revealed that it was most profitable from the financial perspective to sell the wagons in several stages.

In the first stage, 522 wagons located in Ukraine were sold to the Ukrainian company Fortior Capital and to the Estonian company Teslar Trans; the total amount of the transactions was 6.51 million euros. The price of the wagons in Ukraine was influenced by the war, as it is difficult to transport them out of the country.

After a long and tense sales process which involved negotiations with several companies, Operail concluded a sales contract with two subsidiaries of ATASU, one of the largest groups of logistics companies in Kazakhstan, in late December. The companies purchased 410 wagons in total. Last week, a sales contract was concluded with the Estonian wagon rental company Skinest Rail, which purchased 397 wagons.

The majority of the wagons sold are covered with rental contracts. All of the lessees are European companies. The wagons are primarily located in Kazakhstan, Tajikistan, Mongolia, and the Baltic states. No wagons have been rented to Russia.

The process for selling the remaining rental wagons of AS Operail Leasing is currently in the stage of negotiations with the parties that submitted the best tenders.

Operail started renting wagons in 2001, when the company was still part of Eesti Raudtee. In 2009, the wagon rental along with freight transport was transferred to a separate company, EVR Cargo (which later became Operail). In 2017, the business was expanded and further wagons were purchased.

“The business was expanded because Russian transit via Estonia shrunk significantly after the events of the Bronze Night and freight transport as an independent business line was no longer feasible. As freight transport is strategically important for the state, we had to find ways to survive from the economic perspective. We sought for alternative sources of income until we would be able to optimise and reform freight transport in Estonia. The media has painted a picture of renting wagons being a ‘Russian business’ for Operail. This is not true, the business was launched for the opposite reason – to reduce the dependence of the transit of goods from Russia,” reminds Raul Toomsalu, chairman of the board of AS Operail.

The business model always consisted of renting wagons to European companies which use them for freight transport on 1520 mm gauge railroads for domestic as well as international transport operations. The wagons have never been rented to Russian companies or Russia. In the past six years, wagon rental has been the most profitable business area for Operail, generating 99% of the profit.

The state decided to exit the business as the rental of wagons is not an important strategic activity for the state and because this business also thrives in the free market, without the interference of the state.

Estonia decided in the favour of the exit of Operail from non-strategic business areas in 2016, when this idea was included in the coalition agreement. In practice, the owner initiated the process of exiting the non-strategic business lines in the spring of 2021. In the spring of 2022, the manner of the sales changed due to the Russian aggression – instead of the partial privatisation of Operail Leasing AS, it was decided to sell the assets of the company.