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The deputy chief executive of Kazakhstan’s sovereign wealth fund claims the sale of three banks that were nationalized during the country’s financial crisis is “almost done”.
“For Temir, for 16% of ALB [Alliance Bank] and for 93% of shares in BTA Bank, the deals will be finalized within the next two months,” Yelena Bakhmutova, deputy CEO of Samruk-Kazyna, the sovereign fund, told Emerging Markets. “We are still waiting for some approvals from the authorities for the buyers, but from the side of the fund and the government, all the necessary decisions are already made.” The remaining shares in ALB could be sold at a later date after restructuring, she said.
Samruk-Kazyna holds assets in almost 600 Kazakhstan companies; its closest equivalent in the world of sovereign wealth funds is probably Khazanah in Malaysia, in that its mandate is to restructure companies under its ownership and ultimately putt hem back in to the market. The fund inherited the banks after disastrous problems in the Kazakh banking system earlier this decade, and the process of readying them for a return to the private sector has been sometimes tortuous; early in 2013 Kazakhstan’s president, Nursultan Nazerbayev, was quoted as saying they would be sold by the end of that year.
Samruk’s future will be directly affected by the news, discussed in yesterday’s Emerging Markets, that over 100 Kazakh institutions are being readied for privatization, including the major railway and oil and gas companies or their subsidiaries. Many of the companies on the block are today under Samruk’s remit. “The IPO program is continuing,” Ms Bakhmutova said. The next Samruk-held company to be sold, she said, will be KEGOC, the Kazakhstan electricity grid company. “We expect the IPO will happen by December.” She confirmed that “more than 100 subsidiaries and affiliated companies” would be covered by the new privatization drive, through a mixture of IPOs and auctions. “The size of the shares depends on the strategic priorities of the state and the profile of the companies.”
Ms Bakhmutova said that Samruk was undergoing a transformation programme to increase its efficiency. “The main goal for transformation is to increase the effectiveness of the fund and the subsidiaries,” she said. “That is: to change the people, the business processes and the technology.”
“Our benchmarks are Temasek and Khazanah,” she added, referring to the sovereign funds of Singapore and Malaysia; Temasek, too, is made up entirely of direct equity holdings in companies, although 70% of Temasek’s portfolio is outside of Singapore.
If the bank sales do take place, it will mark a key moment in the rehabilitation of Kazakhstan’s troubled banking sector. BTA, in particular, has brought Kazakhstan into the international public eye for unwanted reasons, following the alleged theft of $6 billion of assets by its former chairman Mukhtar Ablyazov, who is now jailed in France.
