Almaty. January 19. KazTAG - Askhat Akhmetbekov. Participation of foreign consultants in the "people's IPO" program planned to be implemented since 2012, according to the experts, is not just justified but quite useful for Kazakhstan. However, it is still unclear how much Kazakhstanis ready to pay to implement the main project of the year. Peter Howes, managing director of Samruk-Kazyna SWF told KazTAG how much it may cost and who can finally be the proprietor of the shares of the national companies
-In spring 2011, 6 consultants were named who will take part in the IPO organization. The experts know that the reputation of some of them is spoilt. Will SWF pay them bonuses in dozens millions dollars?
-No, it won't. We are not ready to pay for their bonuses, thus the price, which we have agreed (you will ask how much, and I won't tell you), is quite low... They do not aspire to work on this market... I think we made a very good and profitable bargain successfully using their experience. They presented us experts who had helped to develop the market in Poland and other states, conducting a number of IPO bargains and placement all over the world. We received a lot of information, proposals...
-I suppose foreign experts’ attraction will cost big money anyway. What is the cost of their services?
-I won't tell you the figures, I will explain you the process of selection and what we are doing.
They presented us their opportunities, presentations, written proposals. We listened to all the companies which took part in the tender on each category: international investment bank, local investment bank, local and international PR, international, local lawyers, financial and audit companies. They made us their pricing proposals. We announced a short-list of those who took part. And even when we realized who the best was, we told them there were two at least; with negotiations we decreased the price to the minimum.
-Have you managed to decrease price of services of all the consulting companies?
-Yes. And they were satisfied. Eventually, even those who lost were satisfied.
-In December KEGOC said it would attract 6 consultants to prepare for the "people's IPO". Why do national companies and the state fund hire consultants separately? Isn't it expensive?
-Every company must prepare independently. Yes, there is a specificity of each company - they have their business plan, their strategy, and their management. You do not buy a stake of Samruk-Kazyna. Purchasing a company's shares you trust the management of this company.
-There are concerns that the shares of the national companies will get in the hands of our tycoons.
-In which way? The mechanism is very simple: every person must make an application and there is a maximum shareholding that he can buy. If he makes two applications he risks to receive nothing. During informational campaign we will explain people that if someone comes and says, submit an application for me, say "Why?". - Ask yourself, :Why are you doing this?" Because he is stealing your opportunity to take part in the program and hold a part of Kazakhstan.
-How much involvement of foreign consultants justified in this strictly national campaign?
-It is extremely justified. Because in Kazakhstan there is no experience to do it transparently. KASE standards are much lower than in other states. Talking about our duty to protect people, ecrease people's risks, we need someone outside Kazakhstan with his tools and interests to watch it. We need an international lawyer, international financier, audit company to give their conclusions. They (companies taking part in the program-KazTAG) might deceive themselves, but lawyers, financiers, bankers will direct them to think correctly.
-However, how much will cost the campaign of the "people's IPO", including PR and etc?
-Quite much in comparison if we conducted it only on Kazakhstani standards. We invest a lot, it is our funds- sole shareholder- now, it is not the money of new shareholders... We give consideration to what we are doing. We have encouraged additional expenses, because we believe we should increase the standards.
We want to develop, we want to protect minorities' interests. Thus, they must understand the question, what they will invest money in. Thus, we are preparing a campaign, to report the information and etc.
-Are expenses calculated in thousands, hundreds or millions?
-Millions.
-Dollars?
-Yes... We are investing several millions of dollars to protect the interests of potential investors.
-Where will the funds attracted within the IPO be directed? To investment, activity expansion, or debts repayment?
-It will depend on the companies. Actually, mostly for expansion and investment projects.
-Why was the program recently presented in London?
-Yes, we presented it. Mostly it was done to attract investments in Kazakhstan to stimulate cooperation between England and Kazakhstan. The more they know about Kazakhstan the more the chances for people to come, look, and spend money here and invest. For this we don't have to wait until they come, we should go and show what we are doing. They are also interested in it, as when we talk about standards increase, it makes them know that Kazakhstan is transparent, attractive and tries to be more contemporary.
-However, a number of experts believe that finally the shares will be purchased by foreign investors. For this the presentation was held in London.
-Perhaps. As I have said before, of course, there is a big demand from outside... Then (after the IPO-KazTAG), what Kazakhstani people want to do with their shares is their business, because we cannot limit their freedom to sell their shares. It is their property, their money. There is a big demand, thus there are buyers.
- What about the opportunity of shares purchase at the secondary market?
- It concerns the secondary market.
-Thus, such opportunity exists?
-Anybody can trade at the stock exchange. If you are ready to sell and somebody is ready to buy- he buys. Nobody looks if he is a foreigner, local, ET or anyone else.
-It reminds Kazakhmys situation. If you remember, this company was privatized in the mid of 1990th and its shares were distributed among its employees, finally, through the second, third hands they were in the hands of the managers of the corporation. Don't you think the situation may repeat but in the scales of the country?
-Of course, that's possible. However, we must hold educational campaign and explain that it is better to hold this money (in shares-KazTAG) and take part in growth and not to sell one's vote. You do not just sell shares, you sell a vote. A share is a vote, you can vote, state your opinion.
-It is known, that the government, ministers and judges are not allowed to purchase the shares within the "people's IPO" program. What about the management of Samruk-Kazyna and the national companies?
-As I know, judges and ministers don't have right for that. Although, frankly speaking, I think it is incorrect, because they are also citizens of Kazakhstan. There is no inside information in the moment of placement. If you think that they (heads of state fund, national companies-KazTAG) know more than bankers or companies you are wrong. I think it is incorrect to prevent them from the program. I would say it would be better if they were minorities as well, to risk their money directly - thus it would protect interests of other shareholders. From another side, of course, ministers mustn't have this property, as they must take decisions in the interests of the state but not their own.
-Poland also conducted “people's IPO”, as a result, almost all the economy of this state is in the hands of international companies. Can we follow this way?
- Not all the economy is in the hands of international companies. They created a lot of work places in Poland because they attracted foreign capital. We have also been attracting foreign capital, but in moderate rates. As for now, no, we can't (follow this way-KazTAG).
-How many shares will an average Kazakhstani citizen be able to purchase? In autumn the statistics agency reported an average revenue of people in Kazakhstan. According to the statistics, it is a bit more than 44 000 tenge, it is about $3 000 a year...
-Well, some people can do almost nothing, others can afford themselves a lot, but we will not let them spend as much as they would like to. Those, who want to invest hundreds of thousands dollars won't be able to. It would be not right. Thus, we would like to create conditions for those, who want to invest 150 tenge or 1000 tenge to be able to do this.
-Doesn't SWF fear reduction of shares cost after their placement at the "people's IPO" that might eventually affect community spirit?
-We do. Thus, we selected the most stable companies, which are less dependent on volatility at the international markets.
-The last question. What is not big sum of population's funds estimated in $100-200 mln for the national companies for, if they almost don't need them at the moment? Almost all the national companies report about financial parameters growth every year. What is the "people's IPO" for?
-It is needed to attract money. IPO is an action of people. I do not know any other mechanism, where people can take decisions whether they want to take part in the economy growth directly holding the shares in these big companies.
-Thank you for the interview