Upstream arm of Kazakh oil and gas company KMG to repurchase GDRs

Upstream arm of Kazakh oil and gas company KMG to repurchase GDRs
By bne IntelliNews December 5, 2017

The upstream arm of Kazakhstan’s state-owned oil and gas company KazMunayGas (KMG EP) intends to launch a tender offer to repurchase all of its outstanding global depositary receipts (GDRs) at $14.00 per GDR, KMG said on December 4. If successful, KMG EP would buy out other outstanding common shares and delist from the London Stock Exchange and Kazakhstan Stock Exchange, the company said.

The move would pave the way for a London listing of KMG EP’s parent company, state-owned National Company KazMunayGaz (NC KMG), as Kazakhstan aims to privatise NC KMG within the next couple of years. The company cannot be listed on a major stock exchange along with its main upstream subsidiary.

In 2016, minority shareholders of KMG EP, including Chinese sovereign wealth fund China Investment Corporation and funds overseen by Western managers, rejected NC KMG’s proposal to give the parent company full control over its subsidiary with an option to sell their shares to NC KMG. NC KMG has a 58% stake in KMG EP.

The price of the offer represents a premium of 23.7% to the 30-day volume-weighted average GDR price of $11.32 at December 1, KMG EP said.

The chairman of Kazakh sovereign wealth fund Samruk-Kazyna, Umirzak Shukeyev, previously stated that Kazakhstan has completed the privatisation of 60% of the companies belonging to the fund under the country’s privatisation programme. The fund has sold 215 small and medium-sized companies since the launch of its privatisation drive and is now preparing larger firms for their IPOs. The government, which has contended with a plunge in oil revenues, had previously said it plans to sell stakes of at least 25% in 45 large state-owned companies. The transactions are to include at least seven IPOs.

The IPOs were originally set to launch in 2017, but the fund has continuously postponed its goals or has been unclear about its future deadlines. Most of the privatisation programme is expected to be completed by 2018, excluding the seven IPOs, some of which will likely get pushed out to 2019 or 2020.