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KAZAKHSTAN SECTOR RESEARCH
Kazakhstan Financial MarketsCorporate Securities -- Blue Chips
May 1998
| Blue Chips sales are crucial for corporate securities market | For the activation of the corporate securities market it was essential to launch the Blue Chip companies' privatisation programme. On December 31, 1996, the government adopted a resolution, defining a list of companies, state-owned blocks (partially) of shares which are to be sold on the Kazakhstan Stock Exchange. The list is comprised of 54 legal entities, operating in different sectors of the national economy: oil and gas, mining and metallurgy, energy and power, transportation, communication, banking, etc. |
| Five Blue Chips to be sold | The list was reconsidered several times, in the middle of 1997 the number of Blue Chips to be put for sale decreased to 27, by the end of the year - down to 5. In a resolution effective as of November 15, 1997, the government terminated the tender among investment companies and banks for the sale of blocks of shares in JezkazganTsvetMet (Jezkazgan Non-ferrous Metals Plant), MangystauMunaiGas, Kazakhtelecom, AktobeMunaiGas, UKTMK (Ust-Kamenogorsk Titanium and Magnesium Plant). The packages to be sold are sized as follows: Jezkazgantsvetmet - 5-20% MangystauMunaiGas - 5-7% Kazakhtelecom - 2-4.5% AktobeMunaiGas - 5-15% UKTMK - 16.5% The National Securities Commission assumes that exact estimations of the blocks' sizes and final settlements will be made within the next two months. We consider the term of 4 to 5 months more realistic though. The results of the tender were considerably affected by the Asian financial crisis of late 1997, when some foreign companies acting as partners to local banks and institutions, appeared insolvent and finally unable to participate in sales. The privatisation of Blue Chips was postponed once again for reconsideration of new offerings. The government is highly interested in local investors active participation in the privatisation. The tender commission might even consider discounted prices for local investors. Local investors are expected to respond to this opportunity. Some of the shares in Blue Chips will be sold in the form of Global and American Depository Receipts (GDRs and ADRs). The proportion in which the conversion into ADRs and GDRs will be made is not yet determined. |
| Final stage in negotiations | On April 17, 1998, the Government signed mandates for two investment consortiums. The contract for the oil and gas company AktobeMunaiGas was signed with a consortium of Kazkommerts Securities (Kazakhstan), Global Menkul Degerler A.S. (Turkey) and Santander Investments (Spain). Another contract for placing the entire state share package in Ust-Kamenogorsk Titanium and Magnesium Plant (UKTMK) was also signed with Kazkommerts Securities and Turkish Global Menkul Degerler A.S. A consortium of Credit Suisse First Boston, Greenwich Capital Markets (Kazakhstan), and Halyk Savings Bank of Kazakhstan will act as lead-manager for placement of shares of Kazakhstan's largest copper producer Jezkazgantsvetmet, and an oil producer MangystauMunaiGas. The Government expects to earn about US $600 million in revenues from selling state blocks in the above companies. |
© Kazkommerts Securities 1998. Please cite source when quoting. This report has been prepared by Kazkommerts Securities and provided solely for information purposes to recipients only. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. This information does not constitute an offer to buy or sell securities. Kazkommerts Securities or its affiliated persons may be buying, selling or holding long or short positions, acting as investment bankers, be represented on the Board of the issuers in securities mentioned herein. This report is not intended for the use of private investors. Investment in Kazakhstan markets is an extremely risky activity and many persons, physical and legal, may be completely or partially restricted from dealing in the Kazakhstan securities markets. |
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