Kazakh state energy, postal firms to kick start IPO drive

By bne IntelliNews February 15, 2011

Clare Nuttall in Almaty -

A wave of IPOs of major Kazakh companies will begin with the listing of state energy and postal companies.

The three companies from within Kazakhstan's state holding company Samruk-Kazyna earmarked to IPO before the end of this year are energy company Samruk-Energo, national grid operator Kegoc and postal company Kazpost.

The Kazakh government already confirmed last year that IPOs of a number of companies from within Samruk-Kazyna, which manages assets worth over $70bn, would take place this year, though details of which companies would be listed and when had not previously been forthcoming. President Nursultan Nazarbayev made the announcement at the congress of Kazakhstan's ruling Nur Otan party on February 11, telling delegates that "people's IPOs" of all three firms would take place on Kazakhstan's domestic stock exchange, the KASE. "The 'people's IPO' will give hundreds of thousands of ordinary Kazakhstani citizens the opportunity to own shares in major enterprises," he said.

Nazarbayev is certain to win an overwhelming majority in the April 3 presidential elections, but, perhaps hoping to further increase his popularity, stressed that the IPOs were intended to benefit ordinary Kazakhs, not just the elite. "We attempted this for the first time at the dawn of our independence... Then some crafty guys with deep pockets came and bought everything up on the cheap," Reuters quoted Nazarbayev as saying.

First of many

These are expected to be just the first of many IPOs from within Samruk-Kazyna. IPOs of oil and gas firm KazMunaiGas, national nuclear company Kazatomprom and rail operator Kazakhstan Temir Zholy are expected in 2012 or 2013, Nazarbayev said.

The decision to list on the KASE is also intended to help develop the local stock market, which suffers from a lack of liquidity, with only a handful of listed companies being actively traded. Both the KASE and the Regional Financial Centre of Almaty City (a government agency set up to turn Almaty into a financial hub for Central Asia) have been lobbying for domestic listings of Samruk-Kazyna assets. Visor Capital writes in a note that the decision to expedite the IPO process is "likely to be positive for the KASE."

The size of the stakes in each company to be listed have not yet been disclosed, but analysts reckon around 10% of each company will be floated. Samruk-Kazyna has been instructed to draw up a plan to carry out the three "people's IPOs" in the first quarter of this year, with a view to completing the process by the end of this year.

Of the three companies selected to launch the series of IPOs, Kazpost is a provider of postal and financial services, operating over 3,500 post offices across Kazakhstan and employing more than 21,000 people. Kegoc is the operator of Kazakhstan's national electricity grid. Samruk-Energo was set up in 2007 to carry out the Kazakh government plans to modernise existing power plants and develop new ones. Its assets include thermal and hydropower plants across the country, as well as the companies set up to construct the new thermal power plant at Balkhash and the Moinak cascade of hydropower plants in southeast Kazakhstan.

Samruk-Kazyna currently owns 100% of both Kegoc and Kazpost, and 93.42% of Samruk-Energo.

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