People's IPO program speeds up development of Kazakh securities market

Baku, Azerbaijan, Jan. 23

By Elena Kosolapova - Trend:

The People's IPO program had a positive impact on the development of the securities market in Kazakhstan, Nurlan Rakhmetov, the chief financial officer and board member of Samruk-Kazyna told Trend.

When the assets of Kazakhstan Electricity Grid Operating Company (KEGOC) were put out for sale within this program, the number of individuals working in the securities market significantly increased in Nov.-Dec. 2014.

"Kazakhstan Stock Exchange (KASE) said that the number of personal accounts opened for individuals in the central depository stood at 88,000 as of late November 2014, or 29,000 more compared to late October 2014," he said.

Rakhmetov added that the number of personal accounts has significantly increased in a month. "That's to say, the number of individuals working in the market is increasing."

People's IPO program will allow Kazakh citizens to become co-owners of the largest national companies. KazTransOil oil Transportation Company joined the program in 2012, Kazakhstan Electricity Grid Operating Company (KEGOC) - in 2014. Samruk-Energo is expected to join IPO in 2015, Kazakhstan Temir Zholy (Kazakhstan Railways) and Kazatomprom in 2016.

Rakhmetov said Samruk-Kazyna considers the People's IPO program of KECOG very successful for numerous indices.

He said the total demand for the company's shares by subscription stood at 16.7 billion KZT and exceeded the volume of supply by 1.3 times.

"The applications for purchasing 26 million shares, that's to say, 100 percent of the offered volume worth of 13 billion KZT, were approved as a result of the subscription," Rakhmetov said, adding that 100 percent of the applications from individuals were approved.

Moreover, the number of bids on KEGOC share purchase, made by the citizens of the country was by 21 percent more than the number of IPO KazTransOil bids from the citizens. There were 42,000 bids on KEGOC, but 35,000 bids on KazTransOil.

"This is a certain growth rate of public confidence in the People's IPO program," he said.

At the same time, he said that the volume of KEGOC shares, placed as part of the IPO, was less than the volume of KazTransOil shares, placed as part of the program -13 billion tenge compared to 28 billion tenge.

The citizens of Kazakhstan, "United accumulative pension fund" JSC, purchasing the shares at the expense of the pension assets, and a market maker are entitled to purchase the shares as part of the National IPO program.

Moreover, such an index as the share of the Kazakh citizens' bids up to one million tenge is monitored upon the National IPO program.

"It is important to include everyone in this program, even those citizens whose income is not so high," he said.

The share of such small bids on IPO KazTransOil amounted to 18 percent of the total volume of bids of physical entities and on KEGOC - 23 percent. Similarly, the volume of big bids, i.e. to five million tenge on IPO KEGOC amounted to 46 percent, whereas it was 60 percent on KazTransOil.

"Therefore, we believe that the main goal of the program is to ensure maximum participation of the broader layers of the population and to make it available for people with different income," he said. "This was reached."

He also said that around 77 deals worth 346 million tenge on KEGOC shares were concluded on the day of the bidding opening on the secondary market on Dec. 19.

"That is, there was a demand and bidding," he said. "This is also a good index."

Samruk-Kazyna National Welfare Fund was created in accordance with the decree of the President of Kazakhstan in 2008 to improve the competitiveness and sustainability of the national economy.

It brings together almost all state-owned assets of Kazakhstan and manages these assets on behalf of the government. KazMunaiGas NC JSC, the railway operator - Kazakhstan Temir Zholy JSC, Kazakhstan Electricity Grid Operating Company JSC (KEGOC), communication operator Kazakhtelecom JSC, Kazatomprom JSC National Atomic Company are among these assets.

Edited by CN


Follow the author on Twitter: @E_Kosolapova

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