Kazakh Wealth Fund Readies Rare Oil IPO and Promises a Discount
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22 August 2022
(Bloomberg) -- Kazakhstan’s sovereign wealth fund plans to sell shares in oil producer KazMunayGas at a discount to drive interest from local investors amid international uncertainty stoked by Russia’s war in Ukraine.
“We will offer a discount to the valuation of KazMunayGas to broaden the investor base and increase interest” domestically in the initial public offering, Samruk-Kazyna Chief Executive Officer Almasadam Satkaliyev said in an interview. Preparations for the IPO to attract “at least several hundred million dollars” will be complete by mid-October, though a decision on timing will depend on the government and the geopolitical situation, he said.
The sale plan is part of a long-delayed series of IPOs aimed at privatizing some of Kazakhstan’s biggest companies as President Kassym-Jomart Tokayev pushes for political and economic reforms in the wake of January’s deadly riots in central Asia’s largest energy exporter.
Samruk-Kazyna, which controls most of Kazakhstan’s state- run companies with assets totalling about $69 billion, intends to gradually transform itself into an investment holding vehicle as it moves away from its units, according to Satkaliyev. ‘Active Shareholder’ The fund has about 40 projects in the deal pipeline for planned investments, including in agriculture technologies and food security, and “is ready to invest in the capital of the projects, provide guarantees, to be an active shareholder working with the government,” he said. “We understand that interest from foreign investors will depend on the success of implementing pilot projects.”
Amid the current international uncertainty and sweeping economic sanctions against Russia and Belarus, Kazakhstan’s partners in the Eurasian Union, the fund will focus mainly on domestic projects for the rest of the decade, including transport infrastructure, telecommunications and power production, he said.
KazMunayGas shares won’t be sold abroad after stoppages on the Caspian Pipeline Consortium, the main route for Kazakh oil exports, added to nervousness among foreign investors already spooked by Russia’s invasion. While “everyone understands the possible risks related to oil deliveries to international markets,” local investors are less sensitive to global events and more optimistic about KazMunayGas’s prospects, Satkaliyev said.
Air Astana, Kazatomprom
The planned IPO of state-run airline Air Astana was delayed to next year amid the geopolitical tensions. The country’s last public listing of a state-owned entity was Kazatomprom, the world’s largest uranium producer, in London and Nur-Sultan in 2018.
After he turned to Russian President Vladimir Putin for help in crushing the riots that he called an attempted coup, Tokayev denounced the dominance of “oligarchic groups” in the Kazakh economy that he said had “dented the country’s competitive edge.” He moved to marginalize former President Nursultan Nazarbayev by ousting allies of the long-time ruler and abolishing his special status as “leader for life.”
Tokayev strengthened his own grip on power with an amended constitution in June that also sought to curb corruption by banning close relatives of the Kazakh president from holding positions in government and state-run companies. He’s expected to set out an agenda for further political reforms in a speech next month.
Why Kazakhstan Protests Reverberated Beyond Region: QuickTake
Tensions flared, however, after Tokayev distanced himself from Putin’s war in Ukraine with the Kremlin leader sitting beside him at an economic forum in St. Petersburg in June, saying Kazakhstan doesn’t recognize “quasi-state territories” backed by Russia. A court ordered a halt to oil loadings at a Black Sea port used to ship Kazakh crude weeks later, a move that was rescinded after a few days.
KazMunayGas slightly increased oil output to 10.8 million tons in the first half of this year from a year earlier, despite disruptions to exports via the Caspian Pipeline Consortium. The company is vulnerable to any protracted disruptions at the consortium, Fitch Ratings said Aug. 10. Halyk Finance, Freedom Finance, BCC Invest and Skybridge Invest are advising on KazMunayGas’s share sale in Kazakhstan, Satkaliyev said. While it was decided not to issue global depositary receipts, foreign investors are welcome to participate in the sale and the fund has seen interest from the US, European Union and Asia, he said.
“We will offer a discount to the valuation of KazMunayGas to broaden the investor base and increase interest” domestically in the initial public offering, Samruk-Kazyna Chief Executive Officer Almasadam Satkaliyev said in an interview. Preparations for the IPO to attract “at least several hundred million dollars” will be complete by mid-October, though a decision on timing will depend on the government and the geopolitical situation, he said.
The sale plan is part of a long-delayed series of IPOs aimed at privatizing some of Kazakhstan’s biggest companies as President Kassym-Jomart Tokayev pushes for political and economic reforms in the wake of January’s deadly riots in central Asia’s largest energy exporter.
Samruk-Kazyna, which controls most of Kazakhstan’s state- run companies with assets totalling about $69 billion, intends to gradually transform itself into an investment holding vehicle as it moves away from its units, according to Satkaliyev. ‘Active Shareholder’ The fund has about 40 projects in the deal pipeline for planned investments, including in agriculture technologies and food security, and “is ready to invest in the capital of the projects, provide guarantees, to be an active shareholder working with the government,” he said. “We understand that interest from foreign investors will depend on the success of implementing pilot projects.”
Amid the current international uncertainty and sweeping economic sanctions against Russia and Belarus, Kazakhstan’s partners in the Eurasian Union, the fund will focus mainly on domestic projects for the rest of the decade, including transport infrastructure, telecommunications and power production, he said.
KazMunayGas shares won’t be sold abroad after stoppages on the Caspian Pipeline Consortium, the main route for Kazakh oil exports, added to nervousness among foreign investors already spooked by Russia’s invasion. While “everyone understands the possible risks related to oil deliveries to international markets,” local investors are less sensitive to global events and more optimistic about KazMunayGas’s prospects, Satkaliyev said.
Air Astana, Kazatomprom
The planned IPO of state-run airline Air Astana was delayed to next year amid the geopolitical tensions. The country’s last public listing of a state-owned entity was Kazatomprom, the world’s largest uranium producer, in London and Nur-Sultan in 2018.
After he turned to Russian President Vladimir Putin for help in crushing the riots that he called an attempted coup, Tokayev denounced the dominance of “oligarchic groups” in the Kazakh economy that he said had “dented the country’s competitive edge.” He moved to marginalize former President Nursultan Nazarbayev by ousting allies of the long-time ruler and abolishing his special status as “leader for life.”
Tokayev strengthened his own grip on power with an amended constitution in June that also sought to curb corruption by banning close relatives of the Kazakh president from holding positions in government and state-run companies. He’s expected to set out an agenda for further political reforms in a speech next month.
Why Kazakhstan Protests Reverberated Beyond Region: QuickTake
Tensions flared, however, after Tokayev distanced himself from Putin’s war in Ukraine with the Kremlin leader sitting beside him at an economic forum in St. Petersburg in June, saying Kazakhstan doesn’t recognize “quasi-state territories” backed by Russia. A court ordered a halt to oil loadings at a Black Sea port used to ship Kazakh crude weeks later, a move that was rescinded after a few days.
KazMunayGas slightly increased oil output to 10.8 million tons in the first half of this year from a year earlier, despite disruptions to exports via the Caspian Pipeline Consortium. The company is vulnerable to any protracted disruptions at the consortium, Fitch Ratings said Aug. 10. Halyk Finance, Freedom Finance, BCC Invest and Skybridge Invest are advising on KazMunayGas’s share sale in Kazakhstan, Satkaliyev said. While it was decided not to issue global depositary receipts, foreign investors are welcome to participate in the sale and the fund has seen interest from the US, European Union and Asia, he said.
