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The European Bank for Reconstruction and Development (EBRD) on February 14th said it has invested $41.1m (€39m) into shares of Kazakhstan’s flagship carrier, Air Astana, supporting the country’s first partial privatization through an initial public offering (IPO). The EBRD’s investment represents a 5% shareholding in Air Astana. The shares will be listed on both the London Stock Exchange and the Kazakhstan Stock Exchange. The IPO is a significant privatization benchmark for Kazakhstan’s economy, which is predominantly controlled by the state. The IPO funds, including the EBRD’s investment, will be used to support Air Astana’s fleet expansion and renewal program, the construction of an aircraft maintenance facility and the acquisition of a flight simulator, the EBRD press service said. Air Astana plans to expand its current fleet to 80 aircraft by 2029 by acquiring new fuel-efficient planes. The EBRD said it will be working with Air Astana towards achieving its target of becoming carbon neutral by 2050. The bank will also use this opportunity to play a greater role in the decarbonization of aviation and to assist in setting up the sustainable aviation fuels industry in Central Asia.
Shares of Central Asia's largest airline Air Astana are now for sale to the public in London, with the company's global depositary receipts (GDRs) trading on the London Stock Exchange (LSE). The GDRs were priced for this month's IPO at $9.50 a piece last week when conditional dealings in began on the LSE and Kazakhstan's Astana International Exchange (AIX). Today, Air Astana's local shares trading on the Almaty's KASE bourse are up 6.1% to 1,241 tenge, whilst dollar-priced GDRs trading on Astana's AIX are down 1.1% to $10.08 at an intra-day volume of just under 30,000 GDRs. The LSE's largest IPO of 2024 to date is set to gauge the demand of frontier and emerging market equity investors for exposure to Central Asian stocks in the aftermath of Russia's 2022 attack on Ukraine. Companies like Air Astana, and notably its low-cost carrier unit Fly Arystan, have in some ways benefited from the disruptions caused by the war and its consequent matrix of international sanctions as people and goods are re-routed through Kazakhstan. Conversely, the threat of more instability in the region and the risks of higher inflation, fuel and operating costs will undoubtedly remain on the minds of potential investors. The IPO in London and Kazakhstan represents a meaningful step for the latter's sovereign wealth fund, Samruk Kazyna, which plans to continue putting the shares of state companies on public markets. According to one former IPO manager from a European bank who declined to be named as the IPO process was underway, Air Astana's offering is the "clearest test in the IPO market to date of investor belief in Kazakhstan’s continued economic development." He also noted that it's "positive to see that four of the nine directors are independent, with three of those independent directors being from outside Kazakhstan" in terms of corporate governance. Air Astana's results for the first nine months of 2023, which were published on December 12th, showed positive top-line growth in revenue, operating profit, and passenger-kilometers flown metrics versus 2022, though the carrier did see a 1% dip in EBITDAR margin (operating profit as a percentage of its revenue) to 28% which investors may focus on going forward.
Early trading in shares of Kazakhstan's air carrier, Air Astana, began today on securities exchanges in Astana and London as part of an initial public offering (IPO). Trading in Air Astana's global depositary receipts (GDRs) -- a tool used by foreign investors to trade local shares of a company -- also started using the company's common shares on the Astana International Exchange (AIX), priced in U.S. dollars. Price quotes are published on the AIX's website. "Freedom Broker acted as a market-maker on [the AIX]. Early trades turned into main trades after completion of settlements and distribution of securities to investors' accounts in the depository system, in accordance with the applications submitted during the IPO period," reads an official statement. According to the results of early trading, the final price of Air Astana's initial public offering was 1,073.83 tenge per share and $9.5 per GDR, putting the estimated market capitalization of the company at about $847 million at the start of trading. As part of Air Astana's IPO, shareholders BAE Systems of the U.K. sold 7,533,109 GDRs and Kazakh national wealth fund Samruk Kazyna sold 60,393,877 shares (with an additional issue). BAE Systems sold 14,187,643 GDRs on the international market . Gross proceeds from the offering are estimated at about $350-370 million -- of which about $120 million will be used by the airline itself to finance its growth strategy. The main public auction for Air Astana securities is scheduled for February 15 and will be held on the AIX, the Kazakhstan Stock Exchange (KASE, Almaty), and the London Stock Exchange (LSE).
