| 2006 ECM Bookrunners for Kazakhstan |
| Rank |
Bookrunner |
Deal value ($mln) |
No. of deals |
%share |
| 1= |
Credit Suisse |
1,128 |
1 |
33.3 |
| 1= |
ABN Amro Rothschild |
1,128 |
1 |
33.3 |
| 3= |
UBS |
423 |
1 |
12.5 |
| 3= |
JPMorgan |
423 |
1 |
12.5 |
| 5 |
ING Bank |
217 |
2 |
6.4 |
| 6 |
Orion Securities Inc |
43 |
1 |
1.3 |
| 7 |
Westhouse Securities LLP |
21 |
1 |
0.6 |
|
Total |
3,382 |
6 |
100.0 |
| Source: Dealogic |
Kazakhstan, the economic powerhouse of central Asia, is set to remain a rich hunting ground for fee-hungry investment banks in 2007. Guy Norton reports.
BOOK EARLY TO avoid disappointment if you’re heading off to Kazakhstan. Securing a first-class seat promises to be an expensive exercise in 2007, with hordes of investment bankers set to descend on the central Asian state in search of highly prized equity mandates.
What’s bad news for the hard-pressed bean counters at financial institutions across Europe trying to curb the exorbitant expenses claims of their equity capital market teams promises to be good news for AirAstana, the leading Kazakh airline that’s one of the candidates for a stock market listing in 2007.
As Euromoney went to press the latest batch of share issues from Kazakhstan was hitting the markets, with mining company ShalkiyaZinc pricing a global depositary receipts offering via ING. Meanwhile, Halyk Savings Bank of Kazakhstan was setting the price range for a GDR offering via Credit Suisse and Deutsche Bank.
Successful track record
Before the latest transactions, four Kazakh companies had already listed on the London Stock Exchange’s main market. A further 10 companies with operations in Kazakhstan are quoted on London junior market AIM. Kazakh companies have so far raised a total of $4.2 billion on both markets in the past two years, a process that is likely to continue for the foreseeable future. “Because there’s been a successful track record of issuance, Kazakhstan has built up a very good reputation in the equity capital markets,” says Lorcan O’Shea, director of equity capital markets for Merrill Lynch in London. He adds: “There’s a general feeling that investors want to increase their exposure to Kazakhstan. As long as the initial issues continue to perform well and companies deliver on results, we expect to see more issuance. Like all the other investment banks we’re doing a lot of marketing in Kazakhstan and have a number of mandates we hope to execute in 2007.”
On the investor front, Mikhail Derkavski, chief investment officer of Compass Asset Management in Almaty, believes that there is more than enough liquidity to support the prospective issuance. “The demand for Kazakh equities is simply huge at the moment and we don’t see it being satisfied by the new issuance in either 2007 or 2008,” he says.
According to Arken Arystanov, chairman of the Regional Financial Centre of Almaty (RFCA), at least 10 more companies from Kazakhstan could raise equity capital funding over the next two years.
Listings pay dividends
To date, the leading Kazakh companies have generally opted to list in London alongside Almaty. But ahead of a visit to Hong Kong by Kazakhstan’s president, Nursultan Nazarbayev, in late December, Arystanov said that freight railway operator Kazjeldortrans might look to ring the changes with a possible Hong Kong listing alongside a Kazakhstan quotation when it comes to market, most probably in 2008. The company is said to be looking to raise about $200 million through the sale of a 20% stake. For its part the RFCA is looking to bolster ties with Hong Kong as part of a broader effort to position itself as a financial hub for central Asia.
Derkavski at Compass says that the Kazakh government’s encouragement of combined domestic and overseas listings is paying dividends for all parties concerned. “Dual listings attract a much broader investor base and give much better liquidity to a stock. They benefit the companies involved, the markets involved and the investors involved. It’s a win-win situation all around.”
In the latest London listing, ShalkiyaZinc priced a $14 million GDR offering at $7.25 per GDR to give it a market capitalization of roughly $410 million.
Diversified metals group Eurasian Natural Resources Corporation is another name in the frame for an equity issue in 2007, with a valuation of up to $6 billion. “The dynamics of commodity prices will be very important for ENRC and determine whether it comes to market or not,” says Dmitri Loukashov, head of Kazakh equity research at Alfa Bank in Moscow.
Both ATF Bank and Alliance Bank, the country’s fourth-biggest and fifth-biggest banks, are appointing lead managers for LSE-listed IPOs in the first half of 2007.
Other prospective issuers include rail operator Kazakhstan Temir Zholy, telco Kazakhtelecom, power company Kegoc and postal services operator Kazpost.