Kazakhstan's new exchange hopes to draw investors via Air Astana, Kazatomprom IPOs

Kazakhstan's new exchange hopes to draw investors via Air Astana, Kazatomprom IPOs
Kazakhstan hopes its second stock exchange will make a bigger impact than its first by playing a role in privatisations of big companies including the national flag carrier.
By bne IntelliNews June 5, 2017

The Astana stock exchange set for a launch in January next year hopes to attract investors via the planned IPOs of Kazakh flag carrier Air Astana and uranium miner Kazatomprom, Astana International Financial Centre (AIFC) governor Kairat Kelimbetov said on June 2. The bourse is aiming to attract most of the major flotations planned under Kazakhstan’s privatisation programme.

Previously, the Kazakh finance ministry has suggested state-run Air Astana and Kazatomprom would be subject to IPOs by 2019 at the latest, but the AIFC's plans suggest the offerings might come much earlier than that.

The new stock exchange will kick off under the AIFC, a financial services hub to be run as a free economic zone and modelled on Dubai’s International Financial Center. It is set begin operations as part of the EXPO 2017 international fair in Astana, which kicks off in June. The AIFC will offer special economic perks to attract legal and financial services companies, international banks and traders.

Some Kazakhstan analysts hold doubts about the AIFC as the country has already attempted to launch a financial hub as part of the Almaty Regional Financial Centre, an initiative, which includes Kazakhstan’s existing stock exchange, that has failed to reap anything like satisfactory results. Still, the AIFC’s selling point - a legal regime based on English common law - has stirred some interest among international investors. 

The Nasdaq and the Shanghai Stock Exchange (SSE) are reportedly in talks to buy stakes in Kazakhstan’s new stock market. The Nasdaq has signed an agreement to provide trading technology infrastructure to AIFC.

Some projects so far announced under the AIFC include the “green financial system” outlined by the European Bank for Reconstruction Development (EBRD), which will take part under its Green Energy Transition approach. The green financial system is meant to boost funding for green projects in the country and beyond.   

The government, which has contended with a plunge in revenues from oil, has previously said it plans to sell stakes of at least 25% in 45 large state-owned companies. The IPOs were originally set to launch in 2017, but the fund has continuously postponed its goals or has been unclear about its deadlines.

The Central Asian country has sold 120 small and medium-sized companies in its privatisation drive and has been preparing larger firms for IPOs.

A stake in oil company KazMunayGaz should eventually become available.

It, along with Air Astana and Kazatomprom and other large Kazakh enterprises, could opt to list some shares overseas, with the air carrier having mentioned Hong Kong, London or Singapore as possibilities.