Samruk-Kazyna seeks top price in Kazakhstan's debut "People's IPO"

By bne IntelliNews October 30, 2012

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Kazakhstan's Samruk-Kazyna has set a price of KZT725 ($4.82) per share for the upcoming IPO of oil transportation company KazTransOil, valuing the 10% stake at $186m. The sovereign wealth fund also confirmed the schedule on another nine so-called "people's IPOs" over the next three years.

The book will open on the float of the KazTransOil stake on November 6, close on December 5, with a settlement period lasting up to December 14, the Samruk-Kazyna board of directors agreed October 29. "The offering price implies a P/E [price/earnings] ratio of around 11.2x, based on 2011 net profit of US$172m (KZT25.9bn)," Visor Capital writes.

Priority will be given to Kazakh retail investors, followed by the National Pension Fund, according to a statement published on Samruk-Kazyna's website. "The number of shares available for purchase by retail investors... will be limited: bids of the retail investors will be fully satisfied within the limit of 7 million tenge ($47,000)," Samruk-Kazyna added. In keeping with the Kazakh government's fondness for social media, the deputy CEO of Samruk Kazyna, Kuandyk Bishimbayev, also published the news on Facebook.

It had previously been announced that KazTransOil would float 40m shares in the first of the long-awaited "People's IPO" programme - a state scheme announced in 2011 that aims to both raise funds for the participating companies' investment plans and increase financial literacy among the population. At the same time, Astana hopes to stimulate activity on the Kazakhstan Stock Exchange (KASE), whose development has been held back by a lack of liquidity and low level of retail investment.

In its statement, however, the sovereign wealth fund did not discuss its decision to issue a straightforward price for the IPO, rather than a range. At a P/E ratio of 11.2x, the IPO looks primarily priced to achieve the highest possible proceeds for the state, rather than pushing the non-monetary elements of the "People's IPO" scheme. For instance, Russian oil pipeline operator Transneft - another non-transparent, state-controlled energy infrastructure company - currently trades at a P/E ratio of around 2.6x.

One analyst, who asked for anonymity because she does not formally cover KazTransOil, expressed surprise at the price, saying the market had expected it would be closer to KZT500. She had no suggestions as to why the announced price is so much higher. Offering a single price rather than a range is "intended to help make the process more transparent for inexperienced retail investors," she suggests.

Meanwhile, Samruk-Kazyna confirmed plans for future IPOs, with electricity grid operator Kegoc, national carrier Air Astana, shipping firm Kazmortransflot, utility Samruk-Energo and gas pipeline operator KazTransGas all set to sell stakes in 2013. Air Astana president Peter Foster announced on October 10 that the company plans to float at least 20% of its shares in a "People's IPO" likely to take place in the third quarter of 2013, with an international secondary listing also on the cards.

Four more IPOs of major companies are due to take place in 2014 and 2015, the fund also confirmed. National oil and gas company KazMunaiGas, railway operator Kazakhstan Temir Zholy, cargo company Kaztemirtrans and nuclear energy holding Kazatomprom are all set to float within the next three years it announced.

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