Uzbekistan's best corporate and investment bank 2020: Silk Capital
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Uzbekistan's best corporate and investment bank 2020: Silk Capital

Silk Capital

Sardor Koshnazarov, Managing Director, Silk Capital.jpg
Sardor Koshnazarov, Silk Capital

How should one judge a corporate and investment bank in a market such as Uzbekistan? Its capital market is practically non-existent, defined more by its prospects than the handful of private placements that have been issued.

Mergers tend to be between one state-owned company and another. Loans are offered generously but largely from state-owned banks to state-owned corporations, leading to questions about how much due diligence is taking place.

Asiamoney could simply tally a list of achievements in the above markets, weighing up the banks with the biggest loan books against those who worked on the most acquisitions. But that would be to ignore the great changes taking place in Uzbekistan, including a landmark reformof the currency market in September 2017 and the creation of a capital market development agency at the start of 2019.

The country is in the middle of a stark transformation, and our choice of Silk Capital as the best corporate and investment bank reflects that. The firm, a boutique investment bank set up in 2017, represents the best way forward for Uzbekistan’s domestic capital market.

The market needs a few things if it is to prosper: a more helpful regulatory environment, a more transparent approach to corporate governance and an influx of foreign capital that helps to accurately price risk. Silk Capital can do little about the first point, but on the latter two it is already making progress.

Under the stewardship of founder Alisher Djumanov and managing director Sardor Koshnazarov, Silk Capital has won mandates from several foreign corporations hoping to make acquisitions in Uzbekistan, including potential deals in the banking, insurance and retail sectors.

It has been hired as a consultant for companies hoping to conform with requirements from the European Bank for Reconstruction and Development, now returned to the country and hungry to lend. It has won mandates from six locally listed companies to help them improve their corporate governance.

The bank also worked on a Som50 billion ($5.2 million) bond for Asia Alliance Bank in September, generating most of the demand for the seven-year deal. The bond was, alas, sold entirely to domestic investors. But Silk Capital’s attempt to market the bond to international accounts at least moved the conversation on and identified some of the main concerns of foreign fund managers, such as a 10% withholding tax for non-residents.

Silk Capital’s key pitch to domestic corporations is that foreign investors can be an invaluable source of capital to fuel growth. The firm wants to be a test case for this approach. Later this year, it plans to list a holding company, Alfin Capital, on London’s Alternative Investment Market.

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