Hong Kong in the running to host three Kazakh state IPOs

Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, is planning initial public offerings (IPOs) for three of its major assets this year, and Hong Kong is being viewed as a strong choice as the potential venue.

Nurlan Rakhmetov, its managing director for transformation, privatisation and restructuring, told South China Morning Post that Chinese state-owned investors have shown keen interest in taking part in the IPOs, buoyed by the central Asian nation’s ambitions of reviving the 2,000-year-old Silk Road.

“They are deeply interested in taking part in the IPOs,” he said. “We have arranged several one-on-one meetings for Chinese investors to talk about investments. This is just the beginning.”

Kazakhstan eager for business with China’s ‘Belt and Road Initiative’

The sovereign wealth fund has assets worth US$70 billion, and a delegation is in Shanghai on Wednesday to promote the three start firms with mainland institutions and SOEs. A similar visit it planned to Russia in May.

They are flagship carrier Air Astana, uranium producer Kazatomprom, fixed line and mobile operator Kazakhtelecom.

Samruk-Kazyna is also introducing other key assets including Tau-Ken Samruk, a mining company, power generator and distributor Samruk-Energy, and shipping firm Kazmortransflot, as part of Kazakhstan’s privatisation programme aimed to reducing state control of the economy and improving corporate governance.

Kazakh President Nursultan Nazarbayev announced in late 2015 the country would roll back state ownership of more than 800 of its companies by the end of 2020, a quarter of which are owned by Samruk-Kazyna.

The privatisation drive is very much allied with China’s ambitious goal of reviving the Silk Road under its “Belt and Road Initiative” proposed by Chinese President Xi Jinping in 2013.

Beijing envisions creating a new global economic order on the back of an investment of at least 780 billion yuan (US$124 billion) in infrastructure constructions along the routes, which tie in 65 countries in Asia, Europe and Africa. The economic initiative is designed to consolidate China’s economic and trade links with the countries.

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

Last year, China’s largest ocean carrier Cosco Shipping bought a quarter stake in Kazakhstan’s KTZE-Khorgos Gateway, a logistics hub operator for US$38 million.

“The companies [we are presenting to Chinese investors] can play a greater role in helping China realise the Belt and Road Initiative,” said Rakhmetov, adding its airport assets are also piquing Chinese investor interest, although he would not disclose the names of those interested Chinese parties.

Aside from Hong Kong, other overseas markets such as London are also believed to in running as listing venues for the three IPOs. Mainland exchanges are not in the fray, as China only allows foreign-funded unicorns to list A shares.

“We are deep in the process of preparing the IPOs,” the managing director added, “and are planning to conduct more IPOs in years to come.”