Approaches to the IPO of KazMunayGas discussed with QAMS experts
Approaches to the IPO of JSC NC KazMunayGas (KMG), determining the share price, as well as further measures on improving the efficiency of corporate governance of public companies of the Samruk-Kazyna Group were discussed with the QAMS experts.
On November 21, representatives of Samruk-Kazyna JSC (Fund) and KMG met with experts of the Kazakhstan Association of Minority Shareholders (QAMS). Daniyar Temirbayev and Arman Batayev, the members of the QAMS Governing Council, represented the Association. Dauren Karabayev, Deputy Chairman of the Management Board for Economics and Finance KMG and Dastan Adihodjayev, the Director of the Privatization and Assets Restructuring Department of the Fund, participated at the meeting on behalf of the Fund Group.
QAMS expressed support for the idea of the IPO as a step towards denationalization and greater transparency of state-owned companies. The initiative of the Association “Public Control of National Companies through Stock Market Instruments”, which was presented to government agencies in February 2022, finds practical application in the framework of the People’s IPO.
The parties raised issues of improving the corporate governance system in the Samruk-Kazyna Group of companies, including the introduction of a procedure for selecting independent directors that meets the interests of all shareholders, including minority shareholders. The agenda of the discussion is especially relevant now, when KMG shares are placed among retail investors. QAMS believes that effective corporate governance is a value that is important for investors, as it is taken into account when making investment decisions, increases the attractiveness of the company for the stock market and expands its opportunities to attract capital.
“It is important what will happen after the IPO. In this context, we are convinced that the Samruk-Kazyna Fund has every opportunity to ensure the introduction of the best corporate practices and a reference corporate culture in Kazakhstan, part of which will be a high level of communication with minority shareholders. Moreover, we believe that progress in improving corporate governance in the Fund Group should become the basis for subsequent legislative changes,” — said Daniyar Temirbayev, Executive Director of QAMS.
The experts were informed in detail about the process of forming the value of KMG shares for the IPO offer. The set price has been agreed with the State Commission for the Modernization of the Economy of the Republic of Kazakhstan and the Board of Directors of the Fund. Representatives of the Samruk-Kazyna Group noted that the offer price of KMG shares during the IPO was determined taking into account the Company’s production and financial indicators, valuation models of investment banks, current market situation and task to ensure maximum coverage of citizens of the Republic of Kazakhstan, and, importantly, contains according to analytical reports of leading Kazakhstani broker-dealer organizations (including among those not directly involved in the preparation and conduct of the IPO) the potential for further growth in the secondary market under favorable market conditions.
“It is necessary to understand that QAMS during the IPO represents the side of buyers — potential investors. The buyer, as a rule, puts more skepticism and risks into the stock offering price, wanting to reduce their risks due to a lower price. However, the market provides a real assessment of the company. In this sense, an IPO is a mechanism to get a market valuation of a company. We believe that after the discussion with the issue of setting exactly such a price for the IPO of KMG, it became more and more clear,” — said Arman Batayev, a member of the QAMS Governing Council.
The issues of optimizing the expenses of the Group’s public companies and the long-term motivation of the management of public companies were also touched upon during the dialogue. Increasing the level of communication with minority investors is another topic for discussion with the expert community. The parties agreed on cooperation and the need to use a dialogue platform in order to ensure transparency of the People’s IPO.
For information: KMG NC is the leading vertically integrated oil and gas company in Kazakhstan with a production volume of 16.1 million tons of oil and gas condensate for M9 2022. The Company’s revenue for M9 amounted to KZT 6.8 trillion, increasing by 47.4% as compared to the same period last year. Net profit reached KZT 1.2 trillion, increasing by 15.9%. Free cash flow, adjusted for attracted financing for the acquisition of a 50% stake in KMG Kashagan B.V., amounted to KZT 730 billion. The IPO of JSC NC KazMunayGas is carried out under the Privatization Plan for 2021-2025, approved by the Government of the Republic of Kazakhstan.