Kazakhstan will allocate around $60mn for the development of the recently launched Astana International Financial Centre (AIFC) over the next three years, Astana Times reported on February 12, citing AIFC Governor Kairat Kelimbetov.
The AIFC is a financial services hub to be run as a free economic zone 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.
“[Similarly to] the world’s leading financial centres created recently in such cities as Dubai and Abu Dhabi, we plan to not depend on budget financing in three to five years, but to use the opportunities of private investments,” Kelimbetov said.
Kazakh authorities previously said they hope to attract $40bn in investments into the country within the next 10 years.
The AIFC, Bloomberg and Atameken Business Channel (ABCTV) have signed a tripartite partnership agreement, ABCTV said in a statement on January 18. Bloomberg will also open an office in Astana. While Bloomberg is set to be AIFC’s foreign media partner, ABCTV will stand as its local counterpart. An official new TV channel will be launched under the AIFC, according to the agreement.
Some of the projects planned for launch this month under the AIFC include an international IT start-up hub as well as a “green” technologies centre developed in partnership with the UN. The two projects alone are expected to attract investments worth $40bn into the country, according to Kazakh media.
The AIFC website announced in December that the financial centre has entered into a partnership with the Microsoft BizSpark programme for the duration of one year. Under the programme, fintech start-ups “get free licensed Microsoft software for design, development, product testing and placing services on the internet, as well as expert support of corporation and its partners by participating in Microsoft BizSpark”. Moreover, the AIFC said in December the fintech start-ups will also benefit from the financial hub’s cooperation with Amazon Web Services (AWS). Specifically, selected start-ups will participate in the AWS Activate programme, which is aimed at supporting young companies by providing them with free access to cloud resources and technological infrastructure necessary for business development.
The AIFC planned to launch a new stock exchange in January, but the launch may have been at least partially delayed as the news of the plans for its launch are still circulating in the Kazakh media. No official statement has been made regarding its launch since the beginning of January. The country's existing bourse in the largest Kazakh city Almaty is widely regarded as a flop and analysts are none too sure that this second go in the capital will be a success either.
However, the new exchange is 25.1% owned by the Shanghai Stock Exchange (SSE), which might lend it some credence. Moreover, Nasdaq stock exchange has 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 AIFC’s new bourse. Nasdaq’s exact share in the Astana International Exchange (AIX) is unclear.
The bourse is aiming to attract most of the major flotations planned under Kazakhstan’s privatisation programme. Sovereign wealth fund Samruk-Kazyna is currently preparing seven state-owned companies for IPOs. The government, which has contended with a plunge in revenues from oil, previously said it plans to sell stakes of at least 25% in 45 large state-owned companies. Initially, it hopes to attract investors via the planned IPOs of Air Astana and the world’s second largest uranium miner Kazatomprom in 2018. Kazatomprom has already hired JP Morgan as its lead adviser for a London listing planned for 2018.
The AIFC also holds cryptocurrency ambitions. Malta-based investment company EXANTE signed in October a memorandum of cooperation on developing Kazakhstan’s cryptocurrency markets as well as “positioning the AIFC as an international financial technology centre”. According to the agreement, EXANTE will launch the Stasis platform, which is a financial and technological infrastructure for launching digital assets, allowing fiat currencies to be tokenised into their digital versions via blockchain. EXANTE also agreed to cooperate with the AIFC on cryptocurrency market regulations and to support the evolution of the Kazakh capital Astana’s “fintech-ecosystem”.