Kazakhstan may open privatisations to foreign investors
Nov 10. Reuters. LONDON
* “People’s IPO” could be extended to international investors
* Kazakhs could be given bonus shares for holding on to assets
* Developing right infrastructure key, work still to be done
Kazakhstan is looking at widening participation in its privatisation programme to international investors, the deputy chief executive of the country’s sovereign wealth fund Samruk-Kazyna said on Thursday.
The central Asian country’s President Nursultan Nazarbayev, in power for two decades, had promised at the start of this year to hold “a people’s IPO” to give hundreds of thousands of ordinary Kazakhs the chance to own shares in major companies and boost the country’s dormant stock market.
“The first stage is limited now only to residents of Kazakhstan and pension funds, but of course at a later stage we see that national companies’ shares could be brought to international investors,” Kuandyk Bishimbayev told a conference at the London Stock Exchange.
“We will look at how the domestic IPO is going and after that we will be more clear on what amount and at what time we should engage the international markets with our national companies. So far such a decision has not been made.”
Initially foreign investors will only be able to buy in to the companies in the secondary market.
The first phase of IPOs is due to kick off in the second or third quarters of 2012, although Economy Minister Kairat Kelimbetov said last month the timetable could be delayed if financial markets remain volatile.
Flag carrier Air Astana, national grid KEGOC and state oil transportation firm KazTransOil are among the companies that are to be floated in the first phase, while the jewels in the privatisation crown – oil firm KazMunaiGas and uranium miner Kazatomprom – will go public after 2015.
Bishimbayev said that while the government wanted people to make money on the shares, it was also wary of giving companies a too-low valuation. The idea of discounts was not being discussed, he said, but citizens could be given incentives.
“We are discussing additional shares for those who keep their shares for a certain period of time, or the next offering could be at a more attractive price,” he said.
This would be a better way of encouraging the country’s long-term aim of creating a culture of equity ownership, said Peter Guenthardt, head of EMEA equity capital markets at UBS, which is advising Kazakhstan on the privatisation programme.
“Anything which creates a long-term incentive has more benefit than short-term gains or discounts,” he told the event.
There is still work to be done in terms of preparing the country’s infrastructure before the IPOs go ahead, said Guenthardt, with clearing and the brokerage network among areas being focussed on.
“If the infrastructure is not ready it is better to postpone … than to rush things and have a system in the back that doesn’t work, because that is going to give a lot of investors an unhappy experience,” he said.
Corporate governance, an issue which led to a damaging boardroom spat at London-listed Kazakh miner ENRC, is an area being addressed in anticipation of the listings.
Aidan Karibjanov, Bishimbayev’s fellow deputy CEO at Samruk-Kazyna, told reporters after the conference transparency was key. Experienced international non-executive directors have been added to state-owned companies’ boards with this in mind.
“If companies are not public they need to be managed as if they were,” he said.