The state-owned rail group has pulled its long-promised stockmarket float of a 24.99% state in its passenger and freight/logistics business. This was due to go ahead in late October and raise up to €5bn (£4.25bn): with equal thirds of the proceeds going to the federal budget, the network of track, signals and stations and "future growth".

The planned IPO was always controversial, not least because it came with prospective bonuses for the DB executive team headed by Hartmut Mehdorn, and because it was heavily opposed by members of Transnet, the main rail union. The union, which is shedding its pro-privatisation general secretary, reaffirmed this at its congress this week.

But DB, which wants to become top dog when the EU market for passenger services is fully liberalised in 2010 and overtake France's state-owned SNCF, is undaunted. It knows it has perhaps just six or seven months to revive the IPO next year. There are federal elections in September and much uncertainty about the outcome, notably for the deeply divided grand coalition of centre-right CDU and centre-left SPD.

The political scene in Germany is frozen – and the capital markets even more so in the unfolding financial and economic crisis. The worst recession since 1993 is taking hold. But Hedderich insists DB's business model remains intact and forecasts a small increase in passenger traffic next year as the car and aviation markets slump. At most he can envisage a 1% decline on the rails.

Even so, nobody outside DB's headquarters near the Potsdamer Platz believes the float will go ahead next year. So Mehdorn and his team have developed an alternative strategy and claim the backing of chancellor Angela Merkel and her CDU, attracting capital from sovereign wealth funds in an initial stage. Mehdorn has spoken about DB being "an ice-breaker" in a Germany highly wary of state-controlled foreign investors.

Andreas Hamprecht, head of international business at DB Long-distance, insisted during a high-speed ICE journey from Hanover to Berlin that talks with funds in the Middle East, Russia, China and elsewhere in the Far East, including Singapore, have gone down well. "It gives us the perspective of fulfilling our growth strategy," he said.

Hedderich added that much less than the 25% equity stake in the "mobility and logistics" business for sale in the IPO was on offer, with no single investor offered more than 10% and, most likely, no more than 5%. It could be the Saudis, for instance, as they're planning enormous investments in rail and need European (preferably German) expert help.

But there's considerable scepticism about the wisdom of accepting capital from state-owned Russian Railways even though Hedderich insisted no investor was excluded a priori. DB is working with the Russians on speeding up journey times on the 20-day rail transit for container trains from China to Hamburg, an expansionist project already used by PC-makers Fujitsu Siemens and designed to offer a cheaper, more eco-friendly service than sea or air freight.

Hedderich suggested DB could, in a second stage of its capital raising, return to the postponed IPO. Either way, the group wants to raise capital rather than increase its €15bn debt to finance its expansion, including in the UK, France and eastern Europe.

DB paid around £130m in January for Chiltern Railways, which operates services from London to Birmingham and Aylesbury, after previously buying freight company EWS. It has half of the new service to Shropshire and Wrexham and 50% of Lorol, the above-ground former North London Line expanding to the east.

Executives made plain that the Chiltern acquisition was a springboard to bidding for more franchises when they become available, probably including the west coast mainline operated by Virgin. There's even the distant possibility of running ICE trains through the Channel tunnel in competition with Eurostar, but that would require huge investment in compatible traction, safety and security controls at German stations.

What is certain is that EWS, which already runs a pilot freight service from Wembley to Cologne, is the front-line force for an assault against SNCF in France's freight market. Axel Marschall, an executive vice-president at DB Schenker, the freight and logistics business, said the goal was to capture up to 25% of the French market. Through its holding in Spanish freight operator Transfesa, DB plans to dominate the north-south European axis from Britain — and Denmark/Sweden — to Spain.

We're witnessing a new front in the Franco-German battle for supremacy in Europe's rail network. SNCF, the leader in passenger services, collaborates with DB in running nine daily services between Paris and Frankfurt/Stuttgart and, through Thalys, between Cologne and Brussels/Amsterdam. But the pair, both members of Railteam, are more likely to end up as sparring partners, not least in Britain.