The Public Council of Samruk-Kazyna JSC and invited experts reviewed the draft updated list of the Fund’s assets proposed for transfer to the competitive environment through IPO, as well as by other means. The number of companies in the list has increased in 2.5 times, to 253. At the same time, it is proposed to keep such large companies as JSC NC KazMunayGas, Air Astana JSC, JSC NC Kazakhstan Temir Zholy, QazaqGaz JSC in the list. At the same time, it is proposed to privatize not only holding companies, but also enterprises with a smaller capitalization. Their privatization is in line with global practice and confirms Kazakhstan’s policy of denationalization and building an effective market economy.

The position of experts. In order to receive a competent assessment, more than 30 leading representatives of the financial industry were invited to the meeting on March 18. The Heads of the largest investment banks and companies in Kazakhstan, eminent scientists and financiers acted as external experts. They are: Oraz Zhandosov, the Director of the Center for Economic Analysis Rakurs, Alina Aldambergen, the CEO of the Kazakhstan Stock Exchange (KASE), Renat Bekturov, CEO of the AIFC Exchange (AIX), Yelena Bakhmutova, the Chairman of the Association of Financiers of Kazakhstan, Daniyar Temirbayev, the Executive Director of the Kazakhstan Association of Minority Shareholders (QAMS), Rakhim Oshakbayev, the Director of the Center for Applied Research Talap, Rasul Rysmambetov, a financier and Member of the National Council of Public Trust under the President of the Republic of Kazakhstan and others. 

Most experts supported the expansion of the list of assets that are planned for transfer to the competitive environment. It was noted that the privatization and, in particular, the IPO of large energy companies, such as KazMunayGas, Samruk-Energy or KEGOC, causes concern in the society, in particular due to the tariff formation. Bolat Zhamishev, the Chairman of the Public Council, drew attention to the fact that even in the event of an IPO or sale of non-controlling interests in the capital of strategic companies, control over them will remain with the state, because it (through the Fund) will retain ownership of controlling shares. In addition, the state will still be able to determine tariff formation with the help of industry regulators. 

IPO Timing. 

One of the main issues of the meeting was the timing of the IPO of the Fund’s companies, taking into account the rapidly changing macroeconomic and foreign policy agenda. According to the expert Rasul Rysmambetov, “the timing for an IPO will never be good”, so we need to promote it now. According to Daniyar Temirbayev, due to the price situation it is now a favorable time for the IPO of oil and gas companies such as KazMunayGas. Rakhim Oshakbayev, the Director of the TALAP Center for Applied Research stressed that in conditions of high uncertainty, it is the “timing” of the IPO that should become the most important factor in making a decision on placement. Yernar Zhanadil, the Managing Director of Samruk-Kazyna JSC for Development and Privatization promised that the Fund will take into account the recommendations on the “IPO timing”, but noted that the final decision will be made by the Government of the Republic of Kazakhstan.   

Participation of citizens. 

Another important point of discussion was participation of citizens of Kazakhstan in the IPO of large companies. The experts stressed that there is no need to save money on conducting an appropriate information campaign, including preliminary public explanations and roadshows (meetings with citizens) at least a month before the actual placement on the stock exchange. A number of experts advocated that the IPO should primarily satisfy the applications of Kazakhstani individuals and institutional investors. Yernar Zhanadil noted that when entering international markets, the Fund and issuers are obliged to comply with global regulatory and listing requirements, and the creation of advantages for Kazakhstani investors can be regarded as infringement of the rights of international investors, nevertheless, for companies planned to withdraw, the Fund would focus only on local investors. 

Decisions and recommendations. 

Following the meeting, the Public Council adopted a number of decisions and recommendations, including: 

▪ to review the previously established terms of privatization, based on the current market conditions and external factors; 

▪ to take into account the possibility of providing a discount for the population and advantages for institutional and retail investors of Kazakhstan during the IPO of those companies that place shares only on the local stock market; 

▪ to conduct explanatory work with the population before placing: roadshow with preliminary opening of application books for at least 1 month; 

▪ consider the possibility of allocating small companies of the Fund engaged in non-core activities for privatization in the first place; 

▪ send to the SEC and akimats a list of liquidated companies for possible transfer under management, taking into account the demand in the regions. 

The minutes of the council meeting were approved on March 30. Now the project of expanded privatization of the Fund’s portfolio companies will be considered by the Government of the Republic of Kazakhstan. As Bolat Zhamishev promised, additional meetings of the Public Council will be held before the direct withdrawal of companies to the IPO, to which representatives of the general public will be invited. So far, ordinary citizens have the opportunity to express their opinion on the official website of Samruk-Kazyna. In the “Public Council” tab, you can leave recommendations and suggestions that will definitely be considered.