Clean sweep in Kazakhstanx
When the Kazakhstan government announced it would be privatizing several state-owned companies, competition to represent parties on the initial public offering (IPO) process was fierce.
Since 2015, the Kazakhstan government has been actively implementing a state privatization program for the sale of various state-owned companies to be privatized through an initial public offering on local and international stock exchanges.
These were the first IPOs in the country for more than a decade, with the companies listed including national airline AirAstana, telecoms operator KazakhTelecom, uranium producer KazAtomProm and oil and gas company KazMunayGas.
Partner Maxim Telemtayev of our Nur-Sultan (formerly Astana) office explains: “When the announcement was made back in 2015, there was a lot of excitement and interest from top law firms around the world, whether they had a presence in Kazakhstan or not.
“Competition was extremely fierce, but it helped that we have a very strong reputation in equity capital markets, so that stood us in good stead.
“Having an in-country presence was also key and especially the fact we’re based in Nur-Sultan, where many of the key players in these transactions have headquarters.”
The Firm competed for mandates in all four IPOs, bidding to act on the joint global coordinators (international banks syndicate) side for the AirAstana, Kazakh Telecom and KazAtomProm IPOs, but competing to represent the issuer on the KazMunayGas deal.
Changing perceptions
Maxim explains: “Because we work for the international banks a lot, the market tends to presume that we’ll represent them, but we are keen to challenge that perception and show our expertise in other areas.
“The secret of our success was an amazing cross-Firm approach.”
“We also wanted to support the Firm’s strategy of growth in the oil and gas sector and to build relationships with key players in the industry, so bidding to represent KazMunayGas was strategically important for us.”
The Firm’s approach paid off, as we won mandates for every IPO – an impressive 100 percent success rate that made waves in the market.
Maxim says: “The secret of our success was an amazing cross-Firm approach. When I first made colleagues aware of the IPOs, the immediate response was that we should have as much support as we needed to ensure we win the work.
“It helped that fellow Nur-Sultan-based partner Pavel Kornilov and myself both have an established reputation in the market, but we had a lot of support from the London office, including from partners Allan Taylor, Melissa Butler, Inigo Esteve, Laura Sizemore, Darina Lozovsky and Monica Holden, who worked with us throughout and flew over for meetings.
“I also can’t overstate the importance of the strong understanding and extraordinary support from our senior management and the Pricing Committee, as the pricing on each transaction was very challenging.”
For the AirAstana, Kazakh Telecom and KazAtomProm transactions, we worked with the bank on the legal aspects of their investor, minority rights, corporate governance and approval processes, so they met the standards required for international exchanges, international practice, and compliance.
“We also play a significant role in helping senior management understand the responsibilities associated with a publicly listed company.”
Wide remit
Pavel Kornilov, the second partner leading the IPO transactions, explains: “We carry out due diligence, verify the IPO prospectus and other materials such as presentations for investors, analysts, and the company’s counsels, also helping to build up a legal framework and documentation for the offering.”
Our remit when representing KazMunayGas includes the preparation of all documentation around the IPO, including the prospectus, advising on issues of corporate governance and helping update internal policies as expected by international investors.
Maxim says: “We are also playing a significant role in helping senior management understand the responsibilities associated with a publicly listed company, such as the importance of investor relationships, disclosure, reporting, transparency and compliance with the local and international stock exchanges.”
Unique challenge
KazAtomProm was the first IPO to be listed on the local and international stock exchanges in November 2018 with the other projects still ongoing.
Pavel says: “One of the interesting challenges of these IPOs is listing them on the Nur-Sultan International Financial Centre Exchange (AIX) as well as their usual listing on the international exchange.
“That’s because AIX is completely new. It was launched in January 2018 without a single listed entity and KazAtomProm was literally the first IPO listed.
“Our team had to work closely with our clients, the Nur-Sultan International Financial Center Authority and with the AIX to make sure each IPO could be implemented smoothly.”
Alongside those four state privatizations, we also won a mandate to represent the issuer on a private IPO for a private commercial retail bank, KaspiBank.
Maxim says: “No other firm in the market is working on all five IPOs, with Clifford Chance and Kinstellar having the next best record by winning work on two transactions each.
“These wins have been a great boost to the team and our professional pride and they set us up brilliantly for the future.”
“While we don’t expect there to be any further IPOs announced in the short-term, there are likely to be more in the future and, as well as this, the work we’re doing has done a lot to raise our profile and reputation, because these are prestigious, high-profile mandates.
“We’ve had an office in Nur-Sultan since 1995 and currently have around 22 people. These wins have been a great boost to the team and our professional pride and they set us up brilliantly for the future.”
