November 16, 2018 / 12:00 PM / a year ago

Exclusive: Kazakh state pension fund was major investor in Kazatomprom IPO - sources

ALMATY (Reuters) - Kazakhstan’s state-run pension fund has bought one-third of the shares sold by uranium miner Kazatomprom in its $450 million London and Astana initial public offering (IPO) this week, two sources familiar with the deal told Reuters.

While Kazakhstan has already said the pension fund was an investor in the flotation, the scale of its involvement - not yet publicly disclosed - shows that demand for the offering was to a large extent propped up by the Kazakh state itself.

Kazatomprom, the world’s largest uranium producer, decided to sell only 15 percent of its stock in the offering after initially saying it was ready to sell up to 25 percent. It priced the offer at the lower end of the $11.60-15.40 range it gave, which valued the firm at $3 billion.

The firm’s main shareholder, sovereign wealth fund Samruk-Kazyna, has said the offer had been 70 percent oversubscribed, meaning there would have been sufficient demand without the pension fund.

The flotation was the first such move by a large Kazakh company in more than a decade and the Astana government plans to follow it up with public offerings of other crown jewels, including national oil company KazMunayGaz KMGZ.KZ, as part of its privatisation programme.

But previous big Kazakh listings, mostly carried out in the early 2000s, may put investors off: a large mining company delisted after corporate governance concerns and two banks have left the market after being bailed out by the state.

Most recently, a KazMunayGaz subsidiary delisted from the London Stock Exchange last May following a prolonged stand-off between the state firm and foreign shareholders over how to use its cash pile.

A source close to the Kazakh government said the Unified Accumulative Pension Fund, which is managed by the central bank and replenished by mandatory contributions from all working Kazakhs, bought 33 percent of the Kazatomprom offering for $150 million and now owned a 5 percent stake in the firm.

Another source, also close to the government, confirmed that the pension fund has invested $150 million in the offering and purchased more than 30 percent of the offered stock. Both sources spoke on the condition of anonymity because they were not authorised to publicly comment on the matter.

The oil-exporting nation’s pension fund, sovereign wealth fund Samruk-Kazyna and Kazatomprom had no comment on the matter on Friday.

Kazatomprom’s global depository receipts traded at $11.60 in London at 1000 GMT, flat on Thursday’s close and the same level at which they were priced in the flotation.

Writing by Olzhas Auyezov;Editing by Elaine Hardcastle

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