Some say nuclear energy is the stepdaughter of the energy industry. Many investors beg to differ. On November 14, Kazatomprom (KAP), the state-owned uranium production company of Kazakhstan made history by becoming the first initial public offering of a large Kazakh company in more than a decade. This is a dramatic finale for two important entities: the newly launched Astana International Financial Center’s (AIFC) stock market, and Kazatomprom, which is compared to the Saudi Aramco of uranium production.
The state-owned nuclear industry national champion is the largest producer of the uranium on the planet (37 percent of mined uranium ore), owned by Kazakhstan’s national fund Samruk-Kazyna. 15 percent of Kazatomprom equity was sold, partially in Kazakhstan’s capital Astana, where AIFC is located, at the inaugural trading event headlined by the veteran President of the republic, Nursultan Nazarbayev, and AIFC (AIX) Governor Kairat Kelimbetov. Kazatomprom also traded at the London Stock Exchange, raising $451 million. 5.5 million shares were sold in Astana, including 3.93 million actual shares and 1.6 million of Global Depositary Receipts.
This author was present at the history-making event for AIFC, as it pioneered flotation of the state-owned national champions. Next year is scheduled to float stocks of major Kazakhstani industrial companies: Air Astana (AIRA.HK), Kazmunaigas — the national oil and gas company, and Kaztelecom (KZTK.KZ), to mention just a few.
Galymzhan Pirmatov, Chairman of the Kazatomprom board stressed that going public increases transparency and makes the company more open and understandable for foreign investors. Analysts hail the IPO as the step toward increased transparency in the industry subject to international politics and trade wars.
The outlook for the uranium mining, and more broadly, nuclear industry, looks moderately optimistic, investors bet. According to the IAEA there are 449 nuclear power reactors in operation today across 30 countries, with 56 others under construction in 15 countries – more than 13 percent growth. While the yellowcake market suffered from overproduction in the last several years, many of the long-term supply agreements are set to expire. This should prop up prices as utility companies, which must secure stable sources of supply for their reactors, will not want to see any more mine closures or cutbacks.
The state-owned nuclear industry national champion is the largest producer of the uranium on the planet (37 percent of mined uranium ore), owned by Kazakhstan’s national fund Samruk-Kazyna. 15 percent of Kazatomprom equity was sold, partially in Kazakhstan’s capital Astana, where AIFC is located, at the inaugural trading event headlined by the veteran President of the republic, Nursultan Nazarbayev, and AIFC (AIX) Governor Kairat Kelimbetov. Kazatomprom also traded at the London Stock Exchange, raising $451 million. 5.5 million shares were sold in Astana, including 3.93 million actual shares and 1.6 million of Global Depositary Receipts.
This author was present at the history-making event for AIFC, as it pioneered flotation of the state-owned national champions. Next year is scheduled to float stocks of major Kazakhstani industrial companies: Air Astana (AIRA.HK), Kazmunaigas — the national oil and gas company, and Kaztelecom (KZTK.KZ), to mention just a few.
Galymzhan Pirmatov, Chairman of the Kazatomprom board stressed that going public increases transparency and makes the company more open and understandable for foreign investors. Analysts hail the IPO as the step toward increased transparency in the industry subject to international politics and trade wars.
The outlook for the uranium mining, and more broadly, nuclear industry, looks moderately optimistic, investors bet. According to the IAEA there are 449 nuclear power reactors in operation today across 30 countries, with 56 others under construction in 15 countries – more than 13 percent growth. While the yellowcake market suffered from overproduction in the last several years, many of the long-term supply agreements are set to expire. This should prop up prices as utility companies, which must secure stable sources of supply for their reactors, will not want to see any more mine closures or cutbacks.
In fact, AIFC, initiated in 2015 at the initiative of President Nazarbayev, demonstrates how far Kazakhstan progressed since its independence. 100 years ago, when the newly created communist Russian government regime took a census, only 3 percent of the future Soviet Republic were classified as “proletarian”, and literacy was low – in the single digits. As I have written about previously, the country transitioned from the Arabic script to Latin and to Cyrillic in rapid succession. Now the country is going back to the Latin alphabet, facilitating integration into the global economy and culture.
Kazakhstan lacked railroads, universities, modern businesses, or research facilities. The czars and Stalin used the country as a dumping ground for surplus peasants and political prisoners. Communist brutality and short-sighted agricultural policies caused a man-made famine, which killed one-third of the population in the early 1930s. The Soviet government also abused the country by making Kazakhstan their largest nuclear testing ground, which exposed hundreds of thousands to deadly radiation over several decades, often with lethal outcomes.
While some of the modern infrastructure was built in the Soviet era, the transition to modern markets did not start until independence was achieved in 1991. In fact, the country is a product of a break-neck development that took four generations to come to fruition.
Today, Kazakhstan is in the heart of the Belt and Road Initiative, a massive transformation of the Eastern hemisphere, funded by China, international development banks, national budgets, and the private sector, both foreign and domestic. As Russia and China increasingly find themselves subject to U.S. sanctions, and Central Asia continues to grow, AIX may attempt to become an important stock market between Frankfurt and Shanghai.
Two-thirds of Kazakhstan’s growth comes from non-commodity sectors, says Bakytzhan Sagintayev, the country’s Prime Minister during a recent visit to Singapore. Kazakhstan, the 28th in the World Bank’s Doing Business Index, is betting on high tech, energy, transportation, agriculture, and healthcare businesses.
Judging by the pace of development in the last 25 years, chances to succeed, at least for some companies, are good. And AIFC will be there to take these enterprises public and connect them to investors from around the world. Thus, Kazatomprom float is the proverbial first step that starts a thousand-mile journey, to quote Laozi, a great Chinese philosopher.
Many more steps will be necessary, but the most important one has already been taken.
Source: Forbes