Astana International Financial Centre seeks exclusive IPO rights for largest state companies

Astana International Financial Centre seeks exclusive IPO rights for largest state companies
One of the large Kazakh companies scheduled for an IPO is national rail operator Kazakhstan Temir Zholy (KTZ).
By bne IntelliNews May 18, 2018

Kazakhstan’s soon-to-be financial hub, Astana International Financial Centre (AIFC), is seeking exclusive rights on initial public offerings (IPOs) of the largest state-run Kazakh companies, AIFC governor Kairat Kelimbetov told Reuters in a May 17 interview.  

The exclusive rights would limit the government’s planned IPOs for 2018-2020 to a new bourse scheduled for launch under the AIFC and thus help the bourse attract liquidity, Kelimbetov argued. Kazakhstan’s current Almaty-based stock exchange is illiquid as local companies normally rely on bank funding. Kelimbetov sees the IPOs as a rare “historic chance” to jumpstart a functioning stock market in the country.

AIFC is run as an economic zone aimed at developing the former Soviet republic’s financial sector. It is modelled on Dubai’s International Financial Centre.

The AIFC's big selling point is its legal regime based on English common law. That has stirred some interest among international investors who will also be awarded special economic perks designed to attract legal and financial services companies, international banks and traders. The AIFC court is headed by Lord Harry Kenneth Woolf, who took an oath as the presiding judge of the AIFC in December. However, the financial services hub is seen by some as a potential tax haven that aims to take advantage of shrinking options for investors to keep finances hidden away from tax authorities.

The AIFC-based bourse was originally meant to launch in December 2017, but the authorities have moved its launch plans to the summer of this year.

The new exchange is 25.1% owned by the Shanghai Stock Exchange (SSE), which might help lend it some credence. Moreover, the Nasdaq stock exchange signed an agreement in May last year to provide trading technology infrastructure to AIFC and has officially become a shareholder and “strategic partner” for the new bourse. Nasdaq’s exact share in the Astana International Exchange (AIX) is unclear.

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