Telegram
WhatsApp
WeChat
An IPO in Kazakhstan is a procedure for the initial issue or offering to the public of existing securities of a business entity in a functioning stock market infrastructure regulated by the norms of national legislation, including the provisions of the laws “On the Securities Market”, “On Joint Stock Companies”, and other bylaws governing the admission of issuers to organized trading.
Launching an IPO in Kazakhstan is often seen as an effective tool for raising additional capital. It is especially beneficial for small and medium-sized enterprises that demonstrate stable growth and seek to expand their activities. This mechanism allows not only to implement investment projects and diversify production capacity, but also to bring to the market innovative products and services, as well as to optimize the debt load by converting debt obligations into equity instruments. At the same time, market entry through IPO in Kazakhstan serves as an effective tool for companies in the large corporate segment aimed at increasing their investment attractiveness, institutionalizing corporate governance, ensuring liquidity of equity capital and formalizing their presence in organized capital markets both inside and outside the state.
IPOs in Kazakhstan can be conducted on two key markets - the Kazakhstan Stock Exchange (KASE) and the AIX International Exchange, integrated into the IFCA. Conducting an IPO in Kazakhstan is a complex but very promising process that we have worked with on more than one occasion. In practice, we have encountered the need for comprehensive preparation of the issuer to go public, from corporate restructuring to disclosure of information per the requirements of the Agency for Regulation and Development of the Financial Market.
IPO in Kazakhstan today
The letters IPO means Initial Public Offering. It refers to the procedure of initial public offering of shares, during which the issuer, which is a commercial organization, for the first time addresses a wide range of investors through the placement of its securities on the organized market. IPO in the Republic of Kazakhstan is an important stage in the flowering of the business, as it opens up the occasion to raise capital through the public sale of shares, which contributes to the growth and scaling of the establishment. With the IPO in Kazakhstan, the company acquires the status of a public company and must provide public reporting in accordance with the demands of the regulatory authorities.
Launching an IPO project in Kazakhstan is a mutually beneficial operation for both parties: for the company, which gets access to new sources of financing and opportunities to expand its activities, and for investors, who, by purchasing shares at the initial public offering, can get a potential profit from the growth of the market value of these securities. Notably, an initial public offering is a process that allows a company not only to raise capital, but also to significantly enhance its reputation in financial markets, strengthen its public presence and increase the liquidity of its shares.
Why it is beneficial to go public in Kazakhstan through an IPO
Kazakhstan, as the region's largest economy with a developed financial infrastructure and supportive government policies, offers a number of advantages for companies seeking to go public. Initial public offerings (IPOs) in Kazakhstan can be realized either by applying to the national stock exchange, KASE, or to the Astana International Financial Center, within which AIX operates. The latter operates with a regulatory regime based on the principles of English common law, which makes it attractive to international investors and allows for the listing of securities denominated in foreign currency.
Regulatory requirements for issuers listing shares in Kazakhstan on the stock exchange are predominantly tailored to the needs of the domestic investment community. The AIX Exchange is guided by a separate regulatory framework and is focused on facilitating cross-border offerings of securities. At the same time, initiation of an initial public offering (IPO) in Kazakhstan on any of the above-mentioned platforms presupposes unification of the issuer's corporate procedures with an appropriate level of transparency, disclosure of information, a certain ownership structure and compliance with the principles of good corporate governance.
Kazakhstan Stock Exchange continues to actively improve the quality of its services, which is becoming one of the key factors supporting the growth of market liquidity and attracting additional participants to the country's financial platforms. Entering the stock exchange through an IPO in Kazakhstan allows a company not only to raise capital, but also to strengthen its market position, increasing confidence in its business among both local and foreign stake.
An IPO on the KASE gives a company access to a wide range of investors interested in active participation in the financial markets of Central Asia. For many companies, this provides an opportunity to significantly improve liquidity and stimulate an increase in market value. In addition, the launch of an IPO on the Kazakhstan Stock Exchange contributes to increased business transparency and improved corporate governance, which plays an important role for potential investors. Attracting investment through an IPO in Kazakhstan not only provides capital funds for expansion and development, but also helps a company demonstrate its financial strength and competitiveness against the backdrop of larger global players.
Special attention should be paid to legal and tax advantages. The country's legislation is adapted to worldwide standards, which creates a safe environment for investment. In addition, Kazakhstan has double taxation agreements with a number of countries, which further reduces the tax burden for foreign investors.
One of the significant advantages of entering the Kazakhstan Stock Exchange is government support for new issuers. Fiscal incentives and various forms of financial assistance can be provided to companies that decide to conduct an IPO in Kazakhstan. This is relevant for startups and companies operating in innovative industries that need to attract significant financial resources for accelerated rise.
The IPO process in Kazakhstan includes strict disclosure and corporate governance requirements, which helps to improve the company's financial discipline. Businesses that have passed IPO on KASE, in the future get an advantage when entering international markets, as compliance with high standards of reporting and transparency gives additional privileges when interacting with international investors. This, in turn, helps the company to build trusting relationships with partners and investors.
One of the main motives for IPOs in Kazakhstan is to raise additional capital, which can be used to expand the business, invest in new projects and strengthen market positions. Entering the stock exchange of Kazakhstan through IPO allows companies to significantly expand their opportunities for obtaining financing, provides them with an opportunity to increase the level of their capitalization. For many companies IPO becomes a strategic step towards diversification of funding sources and reducing dependence on bank loans. This is especially relevant for growing companies that seek to expand rapidly and improve their financial stability
Ultimately, the initiative of each individual corporation to pile in the public market through the IPO procedure in the Republic of Kazakhstan is determined by a combination of factors, including corporate strategy, internal priorities, capital structure, long-term investment and fiscal objectives. It should be noted that the procedure of initial public offering of securities is a complex and resource-intensive process that requires not only comprehensive preparation of consolidated and trustworthy financial statements in accordance with international accounting standards, but also compliance with the full range of normative, regulatory and procedural requirements established by the current legislation.
In addition to fulfilling obligations on lawful execution and registration of the prospectus, the issuer must ensure a transparent management structure that meets the demands of public status, including systematic and timely disclosure of material information to investors and regulators. In this regard, legal support of the IPO process in Kazakhstan is of key importance, as it covers not only drafting and approval of regulatory documentation, but also minimization of legal risks, protection of the issuer's interests, consulting on compliance with legislation and ensuring sustainable interaction with authorized bodies and potential investors.
Contact our specialists
How an IPO of companies in Kazakhstan takes place
A company's entry to the Kazakhstan stock exchange through an IPO carries both potential benefits and risks. However, for a number of companies, especially those focused on development in Central Asia and the CIS, an IPO on the Kazakhstan Stock Exchange (KASE) can be a strategically profitable move. We propose to analyze in detail how to enter the stock market of Kazakhstan.
The process of initial public offering in Kazakhstan (IPO) is initiated by the issuer by means of conclusion of agreements with banking institutions acting as underwriters, which have the appropriate accreditation and competence in the field of support of public offering of securities. Under the terms of the agreement the underwriters select specialized financial advisors with proven experience in structuring and lawful support of the IPO for the purpose of proper fulfillment of obligations to the issuer and compliance with regulatory demands of the regulatory authorities.
The appointment of a lead underwriter with authority to coordinate all stages of the offering is a mandatory procedure, while additional managers are hired to delegate certain functions in order to ensure a multidisciplinary approach to the offering. The underwriters are liable for lawful and financial due diligence of the IPO project aimed at identifying potential regulatory, legal and fiscal ventures, verifying the corporate structure, financial statements and compliance with corporate governance standards in the context of the current legislation of the Republic of Kazakhstan and the demands of the relevant exchange platform.
Furthermore, the underwriters are liable for preparing the full range of documentation, including, but not limited to, the prospectus, application and registration forms, as well as for complying with the timelines and procedures established by the stock exchange and financial supervisory authorities. In parallel, the issuer initiates the necessary corporate restructuring aimed at bringing its organizational structure, financial statements, internal control system and other aspects of its activities in line with the demands for public companies operating in the Republic of Kazakhstan. It should be noted that this stage, depending on the specifics of the issuer's business, its readiness for public trading and the complexity of corporate transformation, usually takes from three to six months.
The second stage is known in lawful doctrine as the “waiting period”. Initiation of the IPO process in Kazakhstan obliges the issuer to apply with an official application for registration of the issue to the authorized body regulating the financial market of the country. At this stage, actions aimed at bringing the registration statement in compliance with the commands and comments set forth by the regulator are implemented. The issuer makes required corrections and additions to the registration materials, ensuring lawful and actual completeness of information disclosure.
In parallel with the above actions underwriters, performing the functions of professional securities market participants, carry out a comprehensive legal, financial and technical verification of the documentation that is submitted to launch the IPO on the share market of Kazakhstan, in order to minimize regulatory and market risks, confirm the reliability of information disclosed in the public offering. At the same time, the issuer is completing the formation and approval of structural mechanisms of corporate transformation (including reorganization, consolidation or other restructuring measures) aimed at optimizing the legal form, increasing investment attractiveness and compliance with regulatory criteria for admission of securities to placement on the regulated market.
The prospectus serves as the main tool for informing and ensuring the integrity of investment decisions, and therefore its preliminary and detailed study before filing documents for state registration is of paramount importance. Ignoring the information contained therein may entail unjustified investment risks, since it is the Prospectus that sets forth the issuer's lawful and financial obligations, the structure of income distribution, corporate guarantees, restrictions applicable to the securities to be purchased, and other circumstances directly affecting the lawful and economic feasibility of participation in the proposed offering.
The procedure for reviewing applications for registration of a company for IPO in Kazakhstan is carried out by authorized specialists of the Agency for Regulation and Development of Financial Market in order to determine the degree of compliance of the submitted papers with the current command in the field of mandatory disclosure of information. This supervisory process is complex and multi-stage in nature, involving a review of the registration statement and accompanying Prospectus for completeness, accuracy and transparency of the information provided.
As a consequence of such a review, it is often necessary to make material changes to the documentation. However, under no circumstances should the completion of the review process be interpreted as an official confirmation of the exhaustive nature of the information disclosed, nor should it be interpreted as an endorsement of the funding attractiveness of the securities in question. After receiving the regulator's notification of the completion of the review, the issuer in partnership with authorized underwriters starts the process of assessing the market capitalization of the company, forming an indicative price scale for the placement of shares, and organizing a set of roadshow events. As a rule, the duration of this stage varies from 90 to 120 days.
The next stage of the process is initiated from the moment when the authorized body of financial supervision provides the issuer with an official permission to place its shares among unlimited number of persons, which is formalized through registration of the issue and subsequent public notification. From this moment comes the period during which the issuer in close cooperation with underwriters agrees on the final price of securities offering. This is fixed in the conclusion of the underwriting agreement - a complex lawful instrument, which regulates in detail the obligations of the parties to purchase by the underwriters the placed shares and the mechanism of their subsequent sale to capital providers on the regulated market.
The procedure of securities admission to trading on the share market of the Republic of Kazakhstan, as a rule, is accompanied by the establishment of a short-term primary trading period, the duration of which usually does not exceed two working days. At that, at the stage of setting price benchmarks the preliminary collection of bids from institutional and retail investors - the so-called bookbuilding mechanism - becomes especially important, the results of which underwriters use to make recommendations to the issuer regarding the fair level of offering price. The final price decision, despite the participation of financial intermediaries, remains within the exclusive competence of the issuer.
Listing on the Kazakhstan Stock Exchange imposes an obligation on the issuer to comply with public law disclosure demands. In particular, in order to ensure transparency and protect investors' interests, a listed company undertakes to provide quarterly and annual financial reports compiled in accordance with IFRS, as well as other material information that may influence the investment decisions of market participants.
If you are facing the task of entering the capital market of the Republic of Kazakhstan, it is advisable to initiate interaction with a competent specialist with in-depth knowledge of the lawful and regulatory framework of this process. During the consultation on registration of a company under IPO we explain in detail to potential clients all essential legal prerequisites and requirements for entities intending to realize admission to trading on the equilty market of the Republic of Kazakhstan.
Going public through an IPO in Kazakhstan: what is a road show
A road show in preparation for an IPO in Kazakhstan is a structured series of communication events organized to pre-position an issuer on the public capital markets. During these events, authorized representatives of the company, with the assistance of loan intermediaries, make a presentation of its business configuration, financial performance and strategic prospects, addressed to potential funding, as well as to the expert community.
The underlying objectives of the road show during the launch of the IPO project in Kazakhstan include the following:
- Mobilization of investment interest. The Issuer aims to initiate and stimulate interest from qualified participants of the financial market, including institutional investors, loan funds, other subjects of funding activity, for the purpose of subsequent placement of securities on the most favorable terms.
- Detailed information disclosure. During the road show, the issuer provides extended and structured disclosure of material information covering strategic development directions, financial and economic results and forecast indicators, which serves as a basis for potential capitalists to form proper awareness necessary for making investment decisions.
- Formation of fair market valuation. The key aspect of the stage is the determination of the price range for the initially placed shares. The road show allows underwriters and organizers of the placement through feedback from investors to form a consolidated view of the issuer's market valuation and correctly determine the placement price.
- Strengthening trust relations. Conducting direct communications between the issuer's top management and key representatives of the investment community helps to increase the degree of trust in the corporate strategy and quality of management, which is important for successful entry into the public market of Kazakhstan.
Before a company goes public in Kazakhstan, its securities are subject to marketing promotion through a road show - a set of events aimed at disclosing investment information and stimulating demand for shares. The format of the event may include presentations, informal meetings with qualified investors, as well as organization of interactive sessions. The participation of key company officials, such as CEOs and CFOs, is strategically important in a roadshow.
Mandatory Documents for Initial Public Offering in Kazakhstan
Initial Public Offering in Kazakhstan requires the preparation and submission of an extensive package of papers.
This is a fundamental lawful document subject to mandatory disclosure in the process of trading shares on a stock exchange in Kazakhstan, which contains detailed data on the issuer's corporate structure, financial condition, risks accompanying investments, and the purpose of raising capital. The prospectus is prepared in accordance with the requirements of the regulator and is subject to preliminary approval.
Such document is a protocol of the meeting of the Board of Directors or General Meeting of Shareholders, which records the will of the lawful entity to conduct an IPO in Kazakhstan, specifying the key characteristics: issue volume, offering price, categories of securities and offering terms.
Completed forms and questionnaires approved by the regulator, indicating key information on the issuer, its beneficiaries, ownership structure, information on affiliates.
Full package of constituent documents, including the current version of the Articles of Association, certificates of state registration and tax registration, as well as all amendments and additions subject to disclosure for the purpose of identifying the legal nature of the issuer.
Concluded agreements with investment banks, underwriters, registrars, depositories and other intermediaries involved in the placement, including subscription terms, placement guarantees and commission costs.
An integral part of the package of papers when investing in an IPO in Kazakhstan is a set of financial statements for the previous financial periods (usually at least three years), confirmed by an independent auditor accredited in accordance with the established procedure. The statements are prepared in accordance with International Financial Reporting Standards (IFRS).
Prepared by an external law firm confirming the compliance of the issuer's activities with applicable law, the legitimacy of its rights to the securities being offered, and the absence of lawful venture that could affect the implementation of the issue.
Foreign companies seeking to conduct an IPO in Kazakhstan often turn to me as a lawful advisor to get detailed info about the process and get professional support in preparing all the necessary documents. We support IPOs in Kazakhstan at every stage, from deal structuring to regulatory compliance, ensuring legal transparency.
Conclusion
The initial public offering (IPO) process in Kazakhstan consists of the issuance by an unlisted company of new or existing securities that are offered for purchase to the investment community. Going public through an IPO in Kazakhstan, despite the challenges and costs associated with the process, is seen as one of the most effective mechanisms for raising capital and ensuring sustainable long term growth.
However, an IPO is a labor-intensive and regulated process that requires strict compliance with laws and extensive information. This article summarizes the stages of the IPO process in Kazakhstan. In practice, IPO procedures are more complex and require specialized knowledge and experience. Professional support in launching an IPO in Kazakhstan will minimize the risks associated with financial and legal aspects, which will ensure a safe entry of the company into the capital market.
