Uzbek expats heed president’s call to return


Lucy Fitzgeorge-Parker
Published on:

Veteran investor launches financial services firm to capitalize on reforms in Uzbekistan, while HSBC banker tapped to drive sovereign Eurobond debut.

Tashkent's railway station: Policies appear to be on the right track

The economic reforms of Uzbek president Shavkat Mirziyoyev received another vote of confidence in September with the launch of a US-based investment firm focused on the country’s financial services sector.

Mirziyoyev has been opening up Uzbekistan’s economy since taking over the presidency in September 2016 after the death of his isolationist predecessor, Islam Karimov.

Key moves have included the lifting of draconian restrictions on foreign exchange and a rebuilding of relations with the international community, notably with the multilateral development banks. Last November, the EBRD reopened its office in the capital, Tashkent, and resumed lending activities in the country after a 10-year absence.

The new president has also reached out to Uzbekistan’s large diaspora, urging them to return and support the nation’s economic liberalization.


Alisher Djumanov

One of the most prominent expats to respond to this call was Alisher Djumanov, a veteran emerging markets adviser and investor. Based in New York since leaving his homeland in 1994, Djumanov is leading the international drive to attract talent and capital to Uzbekistan.

His own return to the market came last year with the launch of Silk Capital, an investment bank based in Tashkent. This was followed this September by the creation of Uzfin, a subsidiary of Djumanov’s US-registered investment management firm, Uzglobal.

Djumanov wants to use the new entity – which will be headed by Silk Capital’s managing director, Sardor Koshnazarov – to build a diversified financial services group focused on Uzbekistan and the wider Eurasia region.

“We aim to attract more than $10 billion of financing over the next decade,” he says. “We want Uzfin to become the largest international investor in the region.”

For the next six months, Uzfin’s fund-raising target is a modest $20 million to $25 million in equity capital – a figure that has already been upped from an initial $10 million due to stronger than anticipated investor interest – as well as $200 million in debt financing.

This will be used to fund the purchase of assets in the commercial banking, insurance and leasing segments, according to Djumanov.

“We already have four or five targets lined up,” he says.

He is also keen to create local market leaders in fintech, investment banking, asset management and Islamic finance, but notes that these will have to be built from scratch as the sectors are in their infancy in Uzbekistan.

“The Uzbek financial sector is very underdeveloped and offers huge growth potential, but most private-sector banks are relatively small and lack capital for expansion,” says Djumanov. “That is where we come in.”


He notes that the business model for Uzfin was partly inspired by the story of Bank of Georgia.

A small, loss-making institution in early 2004, the Caucasian lender was transformed into a highly profitable market leader in just three years by Lado Gurgenidze, an ABN Amro banker who returned to his native Georgia after the election of free marketeer Mikheil Saakashvili.

Under Gurgenidze, Bank of Georgia became only the second lender from the former Soviet Union to list on the London Stock Exchange. Today, it is one of just three non-UK financial groups – along with Investec and fellow Georgian lender TBC Bank – included in the FTSE250.

Djumanov hopes to add Uzfin to that list “within a five- to 10-year timeframe”. As a first step in the process, he is looking to achieve an AIM listing for the new entity in the first quarter of 2019.

Tapping into the global Uzbek diaspora is a big part of our strategy 
 - Alisher Djumanov

He notes that one of the key factors behind Bank of Georgia’s rapid rise was Gurgenidze’s decision to recruit senior managers from among the highly qualified Georgian expat community.

“That played a big role in reassuring international investors,” says Djumanov.

He is optimistic that such “repats” will play an equally important role in the development of Uzfin.

“Tapping into the global Uzbek diaspora is a big part of our strategy,” he says. “Their links to their home country are very strong.

“At the moment people are still working out how to react to the president’s emotional call to come home, but the hope is that there will be a massive reverse brain drain.”

Responding to call

Another Uzbek expat who has already responded to Mirziyoyev’s call is Odilbek Isakov. A banker who began his career at the Uzbek central bank, Isakov has spent the last 12 years working for HSBC in London, most recently in the sovereign bond origination team.

In September, the Uzbek ministry of finance announced that Isakov had agreed to return to Tashkent to head up a new debt management office and oversee the launch of the country’s first sovereign Eurobond.

The transaction was originally planned for this year but is now expected to emerge in early 2019.

Before Uzbekistan can approach international investors, it will need to secure a sovereign credit rating. This has been under discussion for more than a year, but as of late September was still in the works.

Moody’s currently caps the foreign currency deposit ratings of Uzbek banks at B2. In September, however, it changed the outlook on its B2 rating of Hamkorbank, one of the country’s largest private-sector lenders, to positive.