Kazakh sovereign wealth fund Samruk-Kazyna looks to Hong Kong for investor interest

Samruk-Kazyna has plans to reduce its investment in, or dispose of, over 800 companies, large and small, by the end of 2020

PUBLISHED : Monday, 16 October, 2017, 7:00am
UPDATED : Tuesday, 17 October, 2017, 8:25am

Samruk-Kazyna, the sovereign wealth fund of central Asian nation Kazakhstan, will host a roadshow in Hong Kong on Monday to pique investor interest in some of its largest firms in various strategic industries.

Having already raised US$250 million from the sale of 58 small and medium sized state-owned firms, out of 215 designated for privatisation at the end of 2015, Samruk-Kazyna – which manages US$67.4 billion of assets – is gearing up for stake sales and planned initial public offerings (IPOs) of some of its biggest companies.

It forms part of Kazakh President Nursultan Nazarbayev’s privatisation programme announced late 2015 to cut its holding in, or dispose of, over 800 companies, large and small, by the end of 2020. Around a quarter of them are owned by Samruk-Kazyna.

“The idea is to reduce the presence of the government in the economy and reduce the number of entities, to enhance their efficiency,” Dauren Tasmagambetov, director of Samruk-Kazyna’s department for privatisation and assets restructuring, told the South China Morning Post.

The sovereign fund expects to present eight of its most important companies to at least 200 institutional investors, mainly private equity and family wealth managers.

They include flagship carrier Air Astana, uranium producer Kazatomprom, fixed line and mobile operator Kazakhtelecom, power and coal producer Samruk Energy and oil and gas major KazMunayGas.

Also on the list are gold and base metals miner Tau-Ken Samruk, railway operator Kazakhstan Temir Zholy and national postal services firm Kazpost.

Through restructuring, Samruk-Kazyna is hoping to slash the number of companies it owns to 300 by the end of next year from 364 mid this year. It had 600 firms in 2013 before the privatisation drive began. It also plans to further prune the number of management layers to four from five currently, compared to nine in 2013.

Tasmagambetov it expects to sell a third of its assets to international investors, a third to domestic and a third via the formation of joint ventures with foreign firms.

“We see Air Astana, Kazatomprom and Kazakhtelecom as the most prepared IPO candidates,” he said. “We would like the IPOs to take place next year, but their exact timing and structure are still under consideration”.

Asked if any of the companies which plan to go public may have secondary listings in Hong Kong, he said: “We are at a very early stage [of preparation], we are just trying to conduct research to better understand the [requirements] of each venue … that’s why we have been in London and now Hong Kong and likely in Shanghai later to [gauge investors’ interest].”

Helped by rising prices of crude oil and base metals, Kazakhstan’s economic growth picked up to 4.2 per cent in the year’s first six month, from 1 per cent last year and 1.2 per cent in 2015.