SNCF poised to sell rail freight wagon unit for €3bn

Heavily indebted French railways SNCF is on the point of concluding the sale of its rail freight wagon management arm, Ermewa, for more than €3 billion to a consortium of institutional investors, according to French business newspaper, Les Echos.

The publication went on to speculate whether offloading the unit, which has a fleet of around 100,000 rail wagons and tankers, will lead the state utility to consider relinquishing other assets such as its majority shareholding in Geodis.

President and CEO Jean-Pierre Farandou has previously ruled out a sell-off of SNCF's ‘family jewels’ such as the logistics and freight forwarding group Geodis, which last year generated a turnover of €8.3 billion. But with the debts incurred by its main rail passenger branch, soaring to almost €4 billion, partly due to the COVID-19 crisis, SNCF may be tempted into a re-think, the newspaper said.

In recent years, the SNCF Group’s rising red figures have been cited as the principal obstacle in Geodis securing the necessary funds to make the ‘transformative’ acquisition it has been seeking for some time to propel it into the Top 5 in its category worldwide, against a backdrop of fast-paced consolidation in the sector.

In September 2017, Geodis reportedly dropped plans to acquire CEVA Logistics, SNCF appearing to be reluctant to put up the estimated €2-3 billion required for the purchase.

However, early last year French media reports claimed that plans were afoot to allow Geodis to make a major purchase, closely followed by a partial sale that would reduce SNCF’s shareholding in the company to 30-40%.

A source familiar with the matter told Les Échos at the time: “There is no reason for SNCF to retain a majority stake (in Geodis); there are no synergies with the group’s other activities”

When contacted by Lloyd’s Loading List, SNCF declined to comment on either the sale of Ermewa or the possibility of a partial or total cession of its stake in Geodis.