Azernews.Az

By Amina Nazarli

The first Initial Public Offering (IPO) in Azerbaijan can be completed in the near future, said Vugar Namazov, Deputy Chairman of the Baku Stock Exchange (BSE).

Namazov, talking to reporters in Baku on March 9, said that IPO of five strategically important companies of the country is envisaged in one of the "Strategic Road Maps" approved in late 2016.

However, Namazov did not name the companies, only saying that negotiations are already underway with some companies.

Public placement of shares in Azerbaijan at different times was considered by such companies as Embawood and GoldenPay. Azersun Holding recently announced about such plans as well.

An IPO is the first time that the stock of a private company is offered to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded.

“Now we have focused our work in this direction. Implementing the first IPO in the country is a difficult task. Nevertheless, I think that the Baku Stock Exchange is ready for this - we have the necessary legal, technical and organizational capabilities. Last year, we updated our technical system and legislation. Now we need to involve in this process the companies that are ready to conduct an IPO,” he said.

Namazov went on to say that holding an IPO depends not only on the Stock Exchange, but also on companies.

“They should be prepared for public offering of shares, because we cannot force them to conduct IPO, since this is contrary to market principles. Therefore, we must form the right way of thinking in companies,” Namazov said.

He further mentioned that today shares of almost 950 companies are traded at the BSE.

“Today bonds, shares, repurchase agreements (repo) and derivative financial instruments are traded on the Stock Exchange. Naturally, shares rank the first in terms of trade volume,” said Namazov.

“Meanwhile, we have a rather active bond market. Everyone remembers how successful SOCAR bonds’ issuance was. Currently, we see an increasing interest in the bond market,” he added.

SOCAR issued some 100,000 dollar bonds with nominal value of each $1,000 in September 2016, while the bond sale on the secondary market was launched on October 18. The annual interest rate on the bonds stands at the level of 5 percent. The volume of purchase and sale operations in January 2017 amounted to some $16.5 million.

The total turnover of stock exchange transactions on all tools amounted to more than 1.05 billion manats ($590 million) in January 2017, according to the BSE. The figure exceeds the indicator of January 2016 by more than six times.

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Amina Nazarli is AzerNews’ staff journalist, follow her on Twitter: @amina_nazarli

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