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Expert: Further demand for shares in People's IPO to depend on their profitability

Business Materials 6 December 2012 22:36 (UTC +04:00)
Further demand for shares of Kazakh state-owned companies under the People's IPO will depend on the profitability of the shares sold, experts of the analytical center Asyl Invest Ivar Baikenov said.

Azerbaijan, Baku, Dec. 6 /Trend E. Kosolapova/

Further demand for shares of Kazakh state-owned companies under the People's IPO will depend on the profitability of the shares sold, experts of the analytical center Asyl Invest Ivar Baikenov said.

Success of the People's IPO will generally depend on how much people eventually earn. According to our estimates, if people get a yield higher than 15-20 percent, the potential for growth in the value of shares may exceed 40 percent then we can we can expect the same excitement also for other "people's paper," Baikenov told Trend via e-mail on Thursday.

Acceptance of applications for the purchase of shares of KazTransOil finished on December 5. According to the press-service of "KazTransOil", the volume of demand for the shares amounted to 55.9 billion tenge, which is twice the level of accommodation.

"It is obvious that such large numbers were a surprise both for market participants and organizers of the ' People's IPO '.Buying fever was observed among Kazakh citizens, as well as pension funds. Initially, even the optimistic scenario envisaged participation of 10-15 thousands people for the amount not more than 10 billion tenge. However, the total number of applications exceeded 25 000 to the amount of almost $ 19 billion tenge. Thus, individuals will receive about 67 percent of the total shares placed by KazTransOil. This is certainly a success, the IPO can be called a 'national' project, Baykenov said.

Thus, according to Baykenov, it turns out that on average one person decided to buy shares in the amount of more than 740,000 tenge, or about $5,000.

As a result, pension funds received only a small fraction - about 9 billion tenge, while the total costs of applications amounted to about 37 billion tenge. This means, the funds will receive four times less than they would like to purchase, the expert said.

"In our view, this factor should be a key driver of share prices on the secondary market," Baykenov said.

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