Kazakh privatisation programme: A significant proportion of the Kazakh government’s stakes in KazMunayGas, Air Astana and Kazakhtelecom operator are to be sold off over the next 18 months after a government commission gave its approval to plans drawn up last year by the Samruk Kazyna Sovereign Wealth Fund to privatise a total of 153 companies through a series initial public offerings (IPOs), the fund’s CEO Umirzak Shukeyev announced earlier this week.
A partial privatisation of the Kazatomprom nuclear power company is also on the schedule, while the Kazakhstan Temir Zholy rail operator will not be put for sale until at least 2020 “only after its financial recovery.”
The companies, which include 20 of 65 major and 133 second-tier enterprises, will be listed on the London and Hong Stock exchanges as well as on the Astana International Financial Centre.
The proposal to privatise up to 65 companies between 2016 and 2020 was first tabled in October last year, but subsequently stalled, partly because of the country’s sustained financial downturn, but also after institutional investors warned that they could shun the program unless the government in Astana reconsidered KazMunaygaz’s plans to buy out minority shareholders in its UK KMGEP subsidiary at a price equivalent to the cash on its balance sheet. KMG EP’s independent directors claimed that the move would “severely undermine the corporate governance of the company” and that the offer price “significantly undervalued” the company. The holding company’s proposal (including a 14% increase on the original offer ) was rejected at an EGM held in August.
Regardless of this stand-off and the warning from institutional investors, the government commission has now given Samruk Kazyna the green light to proceed with the programme which looks likely to unfold like this:
|Air Astana||Q4 2017 – Q1 2018|
|Kazakhstan Temir Zholy||2019|
The programme has the full backing of President Nursultan Nazarbayev who held meetings with executives from several private equity firms including KKR, the Carlyle Group, Blackstone Group, and TPG when he visited the US in November 2015.