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Kazakhstan’s wealth fund sells 6.3% stake in world’s biggest uranium miner Kazatomprom

Nur-Sultan is edging forward with its privatisation programme.
Nur-Sultan is edging forward with its privatisation programme.

Kazakhstan’s sovereign wealth fund Samruk-Kazyna has sold a 6.27% stake in the world’s biggest uranium miner Kazatomprom, raising $206mn in the process. The company said it pressed ahead with the sale after seeing an improvement in market sentiment, with its share price up by a third since a March trough. 

A total of 15.9mn shares in the form of shares and global depositary receipts (GDRs) were at the end of last week bought at a price of $13 per GDR (a discount of around 6% to the market price) via an accelerated bookbuild for institutional investors at the London Stock Exchange (LSE) and Astana International Exchange (AIX). That led to aggregate gross sale proceeds of $206,653,499.  

Kazakhstan’s privatisation of big companies has only crept forward for several years. This sale might be seen by the market as at least a baby step in a difficult equity sales environment.

The fund said highlights of the placement included the aggregate amount of 1,030,815 shares being sold through the AIX and purchased by domestic institutional investors; 4,333,960 GDRs being placed via the AIX, of which 2,500,000 GDRs were placed to international investors and 1,833,960 GDRs were placed to domestic institutional investors; and 33.7% of the offering being sold through AIX. A stake of 0.01% in Kazatomprom was offered to Kazakh retail investors at the same $13 per share.

Prior to the placement, Citigroup-led deal managers said Samruk-Kazyna was planning a $150mn sale of a 4.55% stake in Kazatomprom.

“Throughout the two-year privatization process of Kazatomprom, we’ve been seeing the continued interest of institutional and retail investors in the company,” Kairat Kelimbetov, AIFC governor said. “I am pleased to note that Kazatomprom has managed to attract through Astana International Exchange a significant volume of foreign investment, which is important for the state privatization program and the economy of Kazakhstan as a whole.”

“The offering is a reassuring event for the successful implementation of Kazakhstan’s privatization plan and the country’s investment case boosting confidence for more placements as the markets gradually rebound from the pandemic,” Dmitry Brodsky, managing director, head of Russia and CIS ECM, Renaissance Capital, noted. 

“The institutional placement is definitely a success as we have seen a very solid support from institutional accounts, both international and domestic, reflecting investors' positive view on Kazatomprom's equity story and the industry as a whole,” Farkhad Okhonov, deputy CEO of Halyk Finance said in the statement. 

Third sale

The sale of the stake was the third such sale carried out by Samruk-Kazyna. The first came with the initial listing of the company in 2018 and the second in the form of a secondary placement last year. Following the latest deal, Samruk-Kazyna is set to retain 76.7% in Kazatomprom.

However, if the offer to Kazakh-citizen retail investors, to be conducted solely via AIX, is exercised in full, the sovereign wealth fund will hold 75% in Kazatomprom.

Kazatomprom made a profit of Kazakhstani tenge (KZT) 213.7bn (€477.2) in 2019, down by 50% y/y. The firm’s 2018 earnings were boosted by one-offs.

The company has cut its 2020 output guidance due to the coronavirus (COVID-19) pandemic, but said a weaker tenge would boost its revenue in local currency terms. 

Last September, Samruk-Kazyna sold 9.86mn global depositary receipts (GDRs) representing interests in ordinary shares in Kazatomprom at a sales price of $13 with gross proceeds of $128.2mn. Of the aggregate amount of GDRs sold in the placing, 6.5mn were purchased by international investors while 3.4mn were purchased by domestic investors. The securities were offered via an accelerated bookbuild on London Stock Exchange facilities and Astana International Exchange (AIX) facilities.

KazPV units

In May 2019, Kazatomprom announced that it had agreed to sell to a consortium of investors 75% of the charter capital of a consolidated package of units under the KazPV project, which includes Astana Solar, Kazakhstan Solar Silicon and KazSilicon. The consortium is made up of Yadran Solar company (Russia), ECM Greentech (France) and Kasen/Canadian Solar (PRC). It is also set to purchase the remaining 25% ownership interest in the KazPV project within three years.

The sale of Kazatomprom's non-core subsidiaries and affiliates is part of a 2016-2020 privatisation plan. The planned sale of non-core assets, such as the KazPV project, was disclosed in the company's IPO prospectus. 

The company floated 15% of its shares on international markets in 2018. 

Kazatomprom accounted for approximately 24% of global primary uranium production as of 2019. The group sells uranium and uranium products under long-term contracts and short-term contracts, as well as on the spot market, directly from its headquarters in the Kazakh capital Nur-Sultan and via its Switzerland-based trading subsidiary, Trade House KazakAtom AG (THK). The company operates at 24 deposits grouped into 13 mining assets.

In March 2020, Kazatomprom completed the sale of its 50% interest in the Uranium Enrichment Centre (UEC) to its partner in the joint venture, Russia’s TVEL Fuel Company, for $100mn.