1. Doing “People’s IPO” in Kazakhstan
May 24, 2011
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2. People’s IPO Program in Kazakhstan
“People’s IPO will provide hundred thousands of Kazakhstan
people an opportunity to own shares of the largest companies
and an additional instrument for investing and increasing
savings”
N.Nazarbayev
Retail IPO experience in other countries:
• Italy, Germany and Malaysia were mostly successful;
• Russia – non-professional investors were not ready to incur losses;
• China – individuals used borrowed money to buy shares;
• Poland – proceeds were used to fund budget deficit.
Conclusion:
• There is no ready-to-use model for mass retail IPO;
• We had to develop own program that would satisfy its social and
economic goals.
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3. People’s IPO Program in Kazakhstan
Stages of People’s IPO program:
Preparatory stage – analysis of current situation in legislation, level
of population’s financial literacy, potential retail investor demand,
infrastructure readiness, selection of IPO candidates.
Ground works – drafting and approval of the Program by the
Government, setting strategic roadmap, setting changes in
legislation, strengthening stock market infrastructure.
Implementation stage – coordination and monitoring company
preparation process, informational and educational campaign,
improvement of regulation environment.
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4. Key parameters of People’s IPO
• Listing on Kazakhstan stock exchange (KASE);
• Further listing abroad might be considered after IPO on KASE;
• Shares are offered to citizens of Kazakhstan and local pension
funds;
• Retail investors have priority rights for subscribing;
• Companies will offer newly issued shares;
• Trade on secondary market is not restricted;
• Minority stakes (up to 15%) will be offered;
• Limit on maximum shares for one individual at subscription;
• Price, quantity and structure of placement will be approved by
Samruk-Kazyna Board of directors and the Government.
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5. Key approaches to People’s IPO
Two major goals:
• Social – preparing population for investing in stocks;
• Economic – providing that companies are ready for IPO and show
positive stock price performance.
Challenges of People’s IPO in Kazakhstan:
• Shares are relatively complex instrument for population;
• Large portion of population lives in rural areas;
• Offering price should be affordable, but not too low, otherwise
people could take it not seriously;
• Majority of the companies are regulated and require regulatory
reforms;
• Corporate governance needs improvement;
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6. Key approaches to People’s IPO
Measures planned to address the challenges:
• Informational campaign in all regions;
• Educational campaign to make sure that population makes informed
decisions;
• Providing access to stock market in all regions through postal
service company Kazpost;
• Minimize volatility rising from fluctuations on international markets;
• Ongoing improvement of regulatory environment to provide long-
term growth of the companies;
• Provide upside for investors for the aftermaket;
• Preparations for IPO in accordance with best practice and full
disclosure;
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7. IPO candidate companies
2012
• KazTransOil • Pipeline oil transportation
2013
• KEGOC • Electric power transmission
• KazTransGas • Gas transportation and distribution
• Samruk-Energy • Power generation and distribution
• Air Astana • Air carrier
• Kazmortransflot • Sea shipping
2014-2015
• Kazakstan Temir Zholy • Railroad monopoly
• Kaztemirtrans • Railroad cargo transportation
after 2015
• NC KazMunaiGaz • Integrated oil and gas holding
• KazAtomProm • Rare metals and uranium
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8. Informational and educational campaigns
Stages of informational campaign:
• Stir interest of population to People’s IPO;
• Inform population about participation rules and mechanisms;
• Provide with basic knowledge and skills for beginners.
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9. THANK YOU
Samruk-Kazyna