Kazakhstan metals tycoon seeks two Hong Kong IPOs, as stock exchange looks to encourage overseas listings
- MM Petroleum and Kazakh Steel, controlled by powerful Assaubayev family, have filed their listing applications
- They would be the second and third non-Chinese issuers to list in Hong Kong in 2022, helping to push diversification goal
Kazakh Steel and MM Petroleum, both controlled 73-year old metals magnate Kanat Assaubayev, filed their preliminary prospectuses in April and June respectively for their initial public offerings (IPOs).
They are among a tiny handful of foreign companies that have sought to raise funds on the city’s bourse this year.
The listing plans come at a time when exports from neighbouring Russia have been drastically reduced amid sanctions imposed by the US and some European countries in response to its invasion of Ukraine.
With reserves of 30 billion barrels as of 2020, Kazakhstan has the world’s 11th-largest crude oil reserves, accounting for around 1.9 per cent of the world’s total, according to Frost & Sullivan.
MM Petroleum has the exclusive rights to 14 oilfields in the Atyrau region, located in the north of the Caspian Sea. Five of them are under construction, while the remainder are either in test-production or are at an early appraisal stage.
The company plans to use the proceeds to bring the seven oilfields currently under appraisal into full development in the next couple of years, and to build new pipelines, according to its draft prospectus.
Assaubayev’s two sons, Aidar and Sanzhar, are chief executive and chief financial officer respectively, and both are controlling shareholders alongside their father.
The older son, 43-year old Aidar, is also the chief executive of London-listed gold miner AltynGold, which operates in Kazakhstan.
MM Petroleum has hired Southwest Securities as the sole sponsor of the deal.
The company’s average selling price for exports rose to US$65.3 a barrel in 2021 from US$47 in 2020. Its export sales are priced with reference to the Brent crude oil benchmark. Fitch forecasts the Brent crude price will average US$85 a barrel in 2023, down from an average of US$105 a barrel this year.
In 2020 and 2021, the company’s net losses were US$3.1 million and US$8.3 million respectively.
Also controlled by the Assaubayev family, Kazakh Steel is engaged in iron ore exploration at a project in western Kazakhstan.
The company aims to bring the central part of the iron ore project, with about 337 million tonnes available for extraction, into commercial production in 2026. Its Hong Kong IPO is intended to fund the US$485.6 million total investment needed.
For the whole of 2021, Kazakh Steel made a net loss of US$1.2 million, wider than its loss of US$185,000 the previous year, because the project was still in its exploration and development stage.
“We are still in an early stage of development and cannot guarantee that we will be able to generate revenue at a profit and grow our business as planned,” it said in the draft prospectus. TC Capital is the sole sponsor for the deal.