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Kazakhstan’s largest companies to go public

16 January 2018 14:28 (UTC+04:00)
Kazakhstan’s largest companies to go public

By Kamila Aliyeva

Kazakhstan is preparing its International financial center Astana for holding an IPO of the country’s largest companies.

The initial public offering (IPO) is the first time that the stock of a private company is offered to the public.

“Within the framework of the task on the ‘Relaunch of the financial sector’, eight actions, which will be ensured through the implementation of the National Bank's health improvement program, are envisaged,” Minister of National Economy Timur Suleimenov said while reading out the plan of the agency's activities for 2018 at a government meeting.

The actions are aimed at securing long-term business lending and drafting the Law “On restoring the solvency of individuals and introducing changes in the program for refinancing mortgage loans,” he noted.

“Also, the preparation of the IFC site for IPO will be provided and the IPO of a number of Samruk-Kazyna portfolio companies will be held in 2018,” Suleimenov added.

He informed that, in total, the ministry envisages about 90 different events for the current year.

“In order to implement the President's Address of January 10, 2018, a draft national action plan is submitted for consideration. In the national plan for the forthcoming period, 87 actions are envisaged for ten main tasks aimed at the development of the state,” Suleimenov added.

Meanwhile, Samruk-Kazyna JSC announced the terms of placement of shares for the IPO of Kazakhtelecom, Kazatamprom and Air Astana.

“Particular attention is paid to the privatization of the seven largest national companies, three of which are already preparing for possible IPO deals. In particular, the fund is considering the possibility of placing Kazakhtelecom's shares before the end of the first half of 2018, and preparations for the Kazatomprom and Air Astana IPO by the fourth quarter of 2018 are also planned,” Nurlan Rakhmetov, the company’s Managing Director for Interaction with the Government, said at the meeting.

He stressed that for precise terms, more information is needed on the financial condition of companies and world prices for raw materials.

“With regard to the companies of KazMunaiGaz, Samruk-Energo, Kazpost and Kazakhstan Temir Zholy, work is underway to determine the key parameters of possible IPOs, which are planned to be held in 2019-2020,” he said.

Many companies looking for further growth often use IPO as a way to generate the capital needed to expand. Despite the fact that further expansion is usually viewed as a benefit to the company, there are both advantages and disadvantages which arise when a company goes public.

Of course, the first and most distinct benefit is that the company will raise its capital. Furthermore, by entering IPO, the public awareness of the company will be increased which in turn opens up new opportunities through introducing company’s products to a new group of potential customers.

One of the most important challenges in going public is the need for added disclosure for investors. In addition, the cost of complying with regulatory requirements may be very high. Public companies also are faced with the added pressure of the market which may cause them to focus more on short-term results rather than long-term growth.

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Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva

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