(bne) – With Kazakhstan’s presidential elections out of the way, the focus in Astana is on the “People’s IPOs”. Plans to sell minority stakes in various state-owned enterprises are a little behind schedule, but due to take place by the end of the year.
By Clare Nuttall (business new europe)
The companies to be floated are those owned or partly owned by state holding company Samruk-Kazyna, which manages assets worth more than $70bn, accounting for around 40% of the economic activity in the country.
Samruk-Kazyna has a total of 404 subsidiaries and affiliated companies, and shares in many of these companies will be offered at a discount to retail investors and pension funds. In addition to raising funds for expansion, this is also intended to stimulate the domestic capital market. At least some of the IPOs are due to take place by the end of this year, and an announcement about the first companies to IPO is expected in the near future.
Companies currently expected to be part of the first wave of IPOs include power generation company Samruk-Energo, grid operator Kegoc and postal service Kazpost. In the following two years, IPOs of other companies including National Company KazMunaiGas (KMG), railway operator Kazakhstan Temir Zholy and uranium miner Kazatomprom are planned.
However, it’s not yet clear exactly which companies will be floated in the first wave of IPOs, because government officials and Samruk-Kazyna are understood to have backtracked from some of their original choices when it became apparent how much work would be needed to prepare them for the stock market. Now there is greater enthusiasm for “People’s IPOs” of companies that are already listed. Selling off some more of the government’s holding in companies such as the Londonlisted KMG subsidiary KazMunaiGas EP or mining giants such as Kazakhmys or Eurasian Natural Resources Corporation (ENRC) would be an easier task than taking a new company to the market.
2011 has already seen significant changes for Samruk-Kazyna. On April 12, Timur Kulibayev was promoted to chairman of Samruk-Kazyna as part of the post-election reshuffle. Kulibayev, the son-in-law of Kazakh President Nursultan Nazarbayev, was previously the company’s deputy chairman. Former chairman Kairat Kelimbetov was moved to the Ministry of Industry and Trade. He had some weeks before he made the statement – unpopular in Astana – that the IPOs were unlikely to happen before the end of the year.
Samruk-Kazyna was created in the depths of the global economic crisis through the merger of two existing organisations – holding company Samruk and investment company Kazyna – in October 2008. It quickly put to work billions of dollars to support the economy during the crisis. With Kazakhstan now growing strongly, the fund’s role has evolved; it is responsible for creating new industries and increasing efficiency in the economy’s most important companies.
Within Samruk-Kazyna, two holding companies, created in late 2008, are responsible for the chemicals and metals sectors respectively. The United Chemicals Company was set up to develop a national chemicals industry and reduce Kazakhstan’s dependence on imports of products such as fertilizers. Tau Ken Samruk is the holding company for the Kazakh government’s stakes in metals and mining companies. While oil and gas still accounts for the lion’s share of Kazakhstan’s exports, metals and mining have been growing in importance in recent years. Soaring metals prices and the steady growth in demand from neighbouring China in particular, were an impetus for Kazakhstan to increase its output.
The government stakes in the two major London-listed mining companies, ENRC and Kazakhmys, are held within Tau Ken Samruk. Both companies have an immense presence on the Kazakhstan mining sector and internationally as well. Kazakhmys is the largest copper producer in Kazakhstan and one of the top-10 producers worldwide. ENRC, a diversified natural resources group, has a presence in China, Russia, Brazil and Africa, as well as Kazakhstan.