Books on Kazakstan
Update No: 319 - (26/07/07)
Astana - the new capital a decade onwards
Countries sometimes try to get themselves out of trouble by changing their
capital. This is especially true when the capital is out on a limb at the
extremity, rather than the heart, of a country; leading to a neglect of the
hinterland. Brazil famously did it with Brazilia in the middle of the last
century, without notable success. Burma is doing it today, apparently under the
influence of astrologers, in whom the military junta running the show have a
firm belief, unlike in democracy. They are building a 'secret' capital 300 miles
north of Rangoon in a malarial swamp, the heart of nowhere, Nay Pyi Daw.
The Kazaks are nomadic in origin and fervent believers in moving on. Ten years
ago their economy was in big trouble, with a free-fall from communist planning.
In 1997 it was decided to move the capital from Alma-Aty, nestling under the
Tien Shan mountain range, on the extreme south east of the country to Astana in
the centre of it.
Many argue that a drive to attract ethnic Kazakhs northward was the key factor
in shifting the capital, which was officially put down to lack of space for
expansion in the former capital, Almaty, and its location in an earthquake zone.
Bringing the capital north had the effect of squashing nascent separatist
tendencies among some ethnic Russians in the region. "By bringing the
physical institutions of state closer to the locus of the perceived unrest,
Nazarbayev showed his readiness to confront threats at a moment's notice,"
argues academic Edward Shatz in a working paper on the move.
Astana's population has more than doubled since the move, to over 600,000, and
it is estimated to top 1 million by 2030. Migrant workers - legal and illegal -
have been attracted from across Kazakstan and neighbouring states such as
Uzbekistan and Kyrgyzstan, and Astana is a magnet for young professionals
seeking to build a career. This has changed the city's demographics, bringing
more ethnic Kazaks to a city that formerly had a Slav majority. Astana's ethnic
Kazak population has risen to some 60 per cent, up from 17 per cent in 1989.
A celebration of success - of Astana and Nazerbayev
The decision may be deemed to be fortuitously successful. The country has
boomed since Astana's remake, in particular since 2000. A decade after
Kazakstan's capital shifted north, Astana held a lavish celebration to mark the
occasion. Amid the festivities, President Nursultan Nazarbayev, the man
responsible for shifting Kazakstan's capital, marked his 67th birthday.
The anniversary featured 50 events, staged in and around the capital. In
addition, the openings of some 30 new facilities - including health clinics,
public buildings and bridges - coincided with the festivities. The entertainment
began on July 1 with the opening of a new hippodrome for horse racing and
traditional Kazakh equestrian sports.
The decision to move to Astana was taken in the mid-1990s, with Nazarbayev
decreeing that the transfer would take place in 1997. The seat of government
shifted in December that year, but the official unveiling of the city took place
the following June. Thus, Astana will officially celebrate its 10th anniversary
next year. Those festivities, many observers believe, will dwarf this year's
munificent display. Last year, the city's official anniversary was moved from
June to July 6, Nazarbayev's birthday, to mark the anniversary of the
parliamentary vote confirming the move north.
Local residents marvel at the changes that have occurred over the past decade in
the city, which was founded as a fortified outpost in the early 19th century,
and in the 1950s became the centre of then-Soviet leader Nikita Khrushchev's
ambitious and ultimately disastrous Virgin Lands agricultural programme.
"This was all dachas," said a street sweeper cleaning a fountain in
the new part of town, gesturing at the grandiose skyscrapers lining the
promenade extending from the presidential palace to the extravagant headquarters
of the national oil and gas company.
"Of course it's changed hugely," agreed a pensioner watching the
celebrations. "The town has grown at such a rate. We didn't imagine it
would be possible to build what are effectively two towns so quickly. On the
left bank there was nothing but dachas, steppe and forest - and now look."
Nazarbayev has been accused by some of building a folly. He rebuffs criticism
that the funds could have been better spent on public services, saying that the
lion's share of investment in Astana's development has come from private
capital. Some US$12 billion has been invested in Astana, he said on July 4. Some
observers suggest that figure is a low estimate. A total of US$5 billion has
been invested in the government quarter alone since the establishment in 2002 of
a Special Economic Zone offering tax incentives to investors.
Regardless of the cost, there's no disputing that Astana has experienced a
construction boom on a grand scale, and there is still five years to go: many
major projects are due to be finished by 2012, coinciding with the end of
Nazarbayev's current term in office. Some 15 million square meters of
construction is planned for the coming years, Astana Mayor Askar Mamin said
recently. "By area, that's another Astana," he told the city council.
Among the big projects still in the developmental stage is Khan Shatyry (the
Khan's Tent), emphasising the nomadic origin of Kazakhstan once again, which is
envisioned as a giant dome that will house entertainment facilities, and provide
a comfortable environment during the severe winters. Khan Shatyry is being
designed by architect Norman Foster, who has already built a pyramid in Astana
housing an opera house and hanging gardens. There are also plans to build an
indoor town for 10,000 people called Batygay.
The rapid rate of construction has not pleased all the city's inhabitants, with
some complaining of sloppy standards. "I don't really trust all those
buildings," said a former Almaty resident who moved to the capital to work
in an embassy. "Some of the buildings are already cracked."
Clan affiliation was also a factor, observers say. Almaty is ostensibly
controlled by the Uly Zhuz (Great Union) clan. Despite being a Uly Zhuz member
himself, Nazarbayev, reportedly wanted to dilute that clan's political
influence, and so he moved the capital to a location where another clan, the
Orta Zhuz (Middle Union), was predominant. The move also brought the capital
closer to the 7,000-km border with Russia, a key ally, and away from the Chinese
Astana's residents express satisfaction with the economic regeneration the move
has brought. "There are lots of towns around Astana and they are developing
in parallel," said Margulan Rakhimbekov, a company manager who moved to
Astana from the nearby city of Karaganda to further his career.
The move has also produced a fair share of lifestyle hassles. A recent poll by
the Parasat analytical centre revealed that the capital's residents are
discontent with the high cost of housing, insufficient public transport and
constant traffic jams. At the same time, three-quarters of those interviewed
said they were generally satisfied with the course of developments.
Many observers conjecture that Astana, which has changed its name four times in
the past five decades, might soon be renamed after the president. Nazarbayev's
public rejection of the idea during the anniversary celebrations is unlikely to
CENTRAL ASIA FACES GRIM ENVIRONMENTAL FUTURE -- UN REPORT
Mudslides produced by heavy rain in the spring wrought havoc in southern
Kyrgyzstan, damaging hundreds of homes and killing livestock. Such natural
disasters could well become more severe and more frequent in Central Asia over
the coming decades, according to a new United Nations report on climate change.
The report, issued April 6 by the UN's Intergovernmental Panel on Climate Change
(IPCC), paints a grim picture for Central Asian governments and policymakers. In
the strongest warning yet issued about the influence of humans on the
environment, the report says with "high confidence" that soon the
region's mountain ranges will not be able to provide the water necessary to
support current agricultural practices.
"Climate Change 2007: The Physical Science Basis" is a summary of over
1,000 pages of findings made by the IPCC. The report initially forecasts
avalanches, increased runoff and earlier spring peak discharge from glaciers and
floods due to unseasonable rains. But by the end of the 21st century,
disappearing glaciers in the Tien Shan, Pamir and Hindu Kush mountain ranges
will result in decreased river flows and severe water shortages. Temperatures
may experience a dramatic increase, while crop yields are forecast to fall 30
per cent by 2050.
The April 6 summary is just one of a series of publications from the IPCC that
have identified significant problems for water supplies in the area. "The
IPCC's warnings about melting glaciers, floods and eventual water scarcity have
been identified as one of the key vulnerabilities," said John Coequyt, an
energy and global warming specialist for Greenpeace. "It's one of the
report's most important findings. But few governments worldwide understand this,
and I don't think any of the countries in Central Asia have taken it
While rising temperatures may provide short-term benefits for the region's
lucrative cotton industry, the lack of ample irrigation may ultimately doom the
cash crop. Mass unemployment looms in already unstable areas, especially in the
Ferghana Valley, if Central Asia's cotton sector collapses.
In Tajikistan, the cotton industry employs about 80 per cent of the country's
rural labour force and the crop is the country's second largest export. However,
75 per cent of Tajikistan's poorest citizens live in cotton growing areas,
according to the World Bank.
Elsewhere, cotton production employs up to 3 million Uzbeks and generates 24 per
cent of the country's US$8.7 billion GDP, providing the Uzbek government with an
annual income of over US$1 billion. These exports account for about 60 per cent
of Uzbekistan's hard currency export earnings.
To avoid economic and political disaster, experts say immediate water-sector and
agricultural reforms are needed. Central Asia's geography, which compels states
in the region to share water resources, dictates an international solution.
Since the collapse of the Soviet Union in 1991, hundreds of inter-governmental
documents have been signed on water policy. Yet each agreement suffers from a
fatal flaw -- none is legally binding. Thus, tension over water resources --
pitting upstream (Kyrgyzstan and Tajikistan) against downstream nations
(Uzbekistan, Turkmenistan and Kazakstan) -- continues to plague regional
Fast action in some instances could be undertaken without inflicting major pain
to national economies, experts contend. "Only for climate-change deniers
could [the IPCC report] appear to be a worst-case scenario." said Peter
Bloch, an agrarian reform expert who has worked on a variety of donor-funded
programmes in Uzbekistan. "[In Uzbekistan] there is a huge potential for
water savings with relatively minor investments in equipment."
The Uzbek government, however, is unlikely to take the steps necessary to
achieve such savings. Agrarian discontent simmers in Uzbekistan, where
government forces have clashed with farmers and local business owners.
Meaningful reforms that encourage better resource management would, at the same
time, give farmers greater control over their crops -- something that is not in
the political elite's interests.
The problem is such no state can solve it on its own. Yet, regional leaders have
not demonstrated any desire to agree on a comprehensive regional framework to
manage water resources. "Individual farmers will not have any incentive to
be environmentally 'responsible' if their neighbours -- whatever their land
ownership status -- are not 'responsible' as well," said Bloch.
Environmental degradation and water scarcity have the potential to propel
Central Asia into a downward spiral of conflict. "The thing about climate
change is that it makes existing problems worse," said Coequyt. "The
problems that Central Asia faces today are going to be exacerbated by climate
change in the very near future."
Kazakstan, Russia: Moscow's Pipeline Attack
It is vital for Kazakstan to engage with a wider world. It needs above all
to manoeuvre a way out of the sphere of influence of Russia. Recent events have
made this plain. Russia is playing Big Brother once again. Its Federal Tax
Service has assessed US$290 million in back taxes and fines against the Caspian
Pipeline Consortium (CPC), Kommersant reported on July 13th.
The CPC pipeline, built in 2001, ships about 540,000 barrels per day (bpd) from
some of Kazakhstan's most productive oil fields near Tengiz to Russia's Black
Sea port of Novorossiysk. The consortium is made up of seven partners, with
Russian state-owned oil transport company, Transneft, the government of
Kazakstan and U.S. energy giant Chevron Corp. owning the largest stakes.
Transneft's partners have long campaigned to increase the capacity of the
pipeline to take advantage of Kazahstan's rising oil production by increasing
shipments through Russia.
The move by the Russian fiscal authorities is part of a larger assault on the
consortium whereby Russian state-owned oil transport company, Transneft, and the
Russian government are challenging the last privately-owned pipeline in Russia.
Previous Russian attempts to stifle the CPC pipeline have prompted neighbouring
Kazakhstan to join alternate pipeline projects to export its oil, pushing the
former Soviet state further from Russia's influence. This round will be no
The move represents a blatant attack against the last privately-owned Russian
pipeline, something Moscow has sought control of for some time.
Kazakhstan needs a new geopolitical deal to ease itself out of the fatal embrace
of Muscovy- com-Siberia.
The Caspian canal offers the way out
With an eye on global trade, Kazak leaders want to build a new canal to
bridge the Caspian and Black seas.
Kazak President Nursultan Nazarbaev's proposal to build a new canal to connect
the Caspian and the Black seas reinforces his ambition to enhance petroleum-rich
Kazakhstan's competitiveness and gain access to bigger markets.
The Kazak leader's call to build a 700-kilometer "Eurasia Canal"
would, he says, transform landlocked Kazakstan and all Central Asian countries
into maritime states, enabling them to significantly increase trade volume.
While the canal would traverse Russian territory, it would benefit Kazakstan
through its Caspian Sea ports. "The Central Asian and Caspian regions are
rich in energy resources & but these reserves have to be delivered to world
markets," Nazarbayev told participants at an international economic forum
in St. Petersburg, Russia, in mid-June. The new canal, he said, would be a
"powerful corridor" providing an outlet to global markets.
Nazarbayev wants to build a shorter, more direct channel between the Caspian and
Black seas, supplementing a canal, the Volga-Don, which is a longer route and
was completed more than 50 years ago. Nazarbayev has emphasized his desire to
work with Russia on the plans.
Shortly after promoting the idea in St. Petersburg, Nazarbayev said in
Ust-Kamenogorsk, Kazakstan, "We have heard some of our Russian colleagues
say that Kazakstan will bypass Russian territory. But we will not bypass anyone.
We are searching for routes that will benefit the export of Kazak products. I
say to Russia: let us build a canal!"
Amirkhan Kenshimov, deputy chairman of the committee on water resources at
Kazakhstan's Agriculture Ministry, told TOL a few possible routes for the canal
are now being scrutinized by a working group at Kazakstan's Academy of Sciences.
The group is expected to make recommendations by the end of the year.
"All the routes are planned to be laid entirely in Russian territory,"
Kenshimov said. The expansion of the existing Volga-Don shipping canal is not
excluded but this would be the longest route, he said.
The Volga-Don canal links the lower Volga River, flowing into the Caspian Sea,
with the Don River, which feeds the Sea of Azov to the north of the Black Sea.
For a decade, tens of thousands of prisoners constructed that 101-kilometer
canal. Completed in 1952, the waterway links the rivers at their closest point
in Russia's Volgograd province.
This network allows an important shipping network between the Caspian and Black
seas, and ultimately the Atlantic via the Mediterranean. Kenshimov says, though,
that the capacity of the Volga-Don does not meet today's needs.
Serik Primbetov, deputy secretary-general of the Eurasian Economic Community (EAEC),
has told local media that the existing Volga-Don canal can carry up to 13
million metric tons per year. The EAEC comprises the former Soviet republics of
Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.
But some shippers complain of limited capacity and access to the Volga-Don
The Kremlin actively supports building a new canal. In April, Russian
President Vladimir Putin proposed an international consortium to build a second
leg of the Volga-Don, a call that was freshly reiterated by First Deputy Prime
Minister Sergei Ivanov. Ivanov has welcomed private and foreign capital,
including that of Central Asian states, to expand the Volga-Don.
The RIA Novosti news agency quoted Ivanov as saying a concession to expand the
canal is attractive to Russia's partners. "Joining the concession will
actually turn Azerbaijan, Kazakstan, and Turkmenistan into maritime
countries," he said.
Kazak authorities are optimistic about lining up investors for the Caspian --
Black seas project, which they estimate will cost US$6 billion and take up to 10
years to build.
In St. Petersburg, Nazarbayev called for constructing a canal that would be an
almost straight shot across the North Caucasus, nearly 1,000 kilometres shorter
than sending goods via the Volga-Don network.
Half the distance is already covered by navigable reservoirs in the Kuma-Manych
Depression of southern Russia.
GREATER CAPACITY THAN VOLGA-DON
According to Primbetov, the new canal would be 80 meters wide and 6.5 meters
deep, accommodating vessels with a load-carrying capacity of 3,500 -- 5,500 tons
as well as newer ships of up to 10,000 tons. Planners estimate the time to
deliver cargo from the Caspian to the Danube at nine to 12 days.
The new canal's traffic handling capacity would be about three times greater
than the Volga-Don canal. The canal would link the Caspian and Don via the Kuma
and Manych rivers.
According to Kenshimov, governments and private businesses could participate in
funding the Eurasia canal.
Kazakstan possesses enormous fossil fuel reserves, other minerals, and metals
for export. With its booming energy sector, economic reform, good harvests, and
foreign investment, the country enjoyed double-digit growth in 2000 -- 2001 and
8 per cent or more per year in 2002 -- 2006. Per capita gross domestic product
in Kazakstan last year was about US$9,400, lower than in Russia (US$12,200), but
more than four times higher than in neighbouring Uzbekistan.
Possessing about 26 billion barrels of proven oil reserves and 1.8 trillion
cubic meters of natural gas, the country aims to produce as much as 3 million
barrels of oil per day by 2015. This would lift it into the ranks of the world's
top 10 oil-producing nations. It is the world's ninth largest country in land
area and shares borders with China, Russia, Kyrgyzstan, Turkmenistan, and
Kazakstan exported 52.3 million tons of oil in 2006, of which about 80 percent
travelled through Russian pipelines. Main oil export routes are the Caspian
Pipeline Consortium and the Atyrau-Samara oil pipeline to Russia, and Kazakstan-China
oil pipeline to China.
Kazakstan is currently planning to build a port on the Caspian coast to
transport its oil to the Baku-Tbilisi-Ceyhan pipeline when the gigantic Kashagan
oil field starts production. But the country "can't depend on a single
pipeline," Deputy Energy and Mineral Resources Minister Bolat Akchulakov
told Dow Jones Newswires in late June. "It's an issue of diversification of
export routes for us so that should something happen with one pipeline we have
alternative routes of transportation."
Maksut Sarsenov, a political analyst from Kazakstan's Association of
Sociologists and Political Analysts based in Almaty, said a new canal "will
give advantages to Kazakhstan, Russia, and other countries, which should have no
objection." Goods from the region would reach different countries via the
Mediterranean and the Atlantic more cheaply because of reduced transport costs
and shipping time.
Along with Kazakstan and Russia, the interested parties are Azerbaijan, Iran,
and Turkmenistan, surrounding the Caspian; and Turkey, Romania, Bulgaria,
Ukraine, and Georgia, bordering on the Black Sea in company with Russia.
But Bakhtiyar Albani, deputy head of Kazakstan's Tabigat environmental
union, is sceptical of benefits which the nation could reap of the new canal,
calling the project "a dangerous utopia which can be reached but will
finally result in colossal losses."
"The difference between the ecological systems of the Black Sea, which is a
distant arm of the Atlantic Ocean by way of the Mediterranean Sea, and the
Caspian Sea, can lead to a catastrophe," he told TOL. "The new trade
route will undermine the environment, people's health and the economy."
He maintained that the project sprang from Nazarbayev's ambition to build
"the project of the century."
Kenshimov, however, said the ecological impact of the project is being
scrutinized thoroughly because "when the two seas are linked with each
other, they will have a uniform flora and fauna."
Unicredit buying controlling stake in ATF Bank
Bank Austria Creditanstalt, which is part of the European banking group
UniCredit, has signed an agreement on the purchase of a controlling stock
interest in Kazakstan's ATF Bank, the group said in a statement, New Europe
UniCredit valued the bank at US$2.175 billion, although this amount does not
take into account a US$100-million increase in its charter capital that the
current ATF shareholders will carry out before the transaction is completed.
"Bank Austria Creditanstalt is striving to acquire a 100 per cent stake in
ATF Bank by purchasing the shares of current majority shareholders and by taking
part in a tender that is to be announced by minority shareholders. The bank
expects that its stake in the charter capital of ATF Bank will total at least 85
per cent as a result of these transactions," the statement read. The
purchase will be completed in the second half of 2007. The group will use its
own internal resources to finance the deal.
UniCredit's financial consultants in the deal are Credit Suisse as well as
UniCredit Markets & Investment Banking, while its legal consultant is Allen
& Overy. According to UniCredit, ATF Bank has an 11.8 per cent share of the
Kazak banking market and total assets of 6.3 billion Euro at the end of 2006.
The bank also operates in Kyrgyzstan, Tajikistan and Russia via subsidiaries.
Eurasian Development Bank to help build NPP
The Eurasian Development Bank is prepared to take part in a project aimed at
building a nuclear power plant in Kazakstan. The bank's participation in the
project "has already entered the stage of definite agreements, which are
included in a memorandum we have signed with Kazatomprom and Techsnabexport,"
the bank's CEO, Igor Finogenov, told a news conference in Almaty on June 19th,
New Europe reported.
"The memorandum regulates our relations, including during the construction
of new power generating units for nuclear power plants," Interfax quoted
him as saying.
"We are ready to do it. We are now discussing the exact form of our
participation. I am convinced that we will prove instrumental in implementing
these large-scale projects in the nuclear power sector," he said.
In December 2006, the Eurasian Development Bank, national atomic energy company
Kazatomprom and Russia's Techsnabexport signed a memorandum on cooperation,
which allows the bank to finance joint projects of Kazatomprom and
Techsnabexport. The Eurasian Development Bank is an international financial
organisation, which was founded by Russia and Kazakstan in January 2006 to help
its member-countries develop their market economies and expand mutual trade and
business ties. The bank has a US$1.5-billion charter capital.
Kazakstan, TengizChevrOil plan gas processing complex
Kazakstan wishes not to limit its exports to its main mineral riches -- oil and
gas -- but to also sell refined products that are priced higher in the world
markets. However, it seems that the plans of the Kazak government for the
development of the country's petroleum and gas products industry do not exactly
match those of the foreign investors who are interested solely in the production
of crude, New Europe reported.
The Kazak government has held long talks with TengizChevrOil (TCO) on securing
Tengiz gas for the future gas processing complex, the construction of which is
going to start this year in the Atyrau province. "Before the end of this
month, we are planning to sign a propane supply contract with TCO, and in the
next month -- a 13 year contract with a five-year extension option for supply of
dry gas from Tengiz," national company KazMunaiGaz representative, Murat
Dosmuratov, told New Europe.
According to him, it was "a very long negotiation process with TCO"
that the national company had started back in September of the last year. This
has resulted in the extension of the gas processing complex project for a whole
year, from 2011 to 2012.
To appreciate the importance of these TCO contracts for the Kazak economy, it is
worth noting that Kazakstan has set a goal to change its image from a primary
producing country to a country that is capable of producing high priced goods.
The development of petrochemistry should bring the economy of Kazakstan to a
qualitatively new level. The integrated petrochemical complex in Atyrau should
become one of the steps that would bring Kazakstan to this goal. The heart of
the complex will be a gas chemical plant that will use Tengiz gas at the first
stage and Kashagan gas at the second.
According to the specialists, Tengiz gas has a unique composition -- its ethane
content reaches as high as 15 percent. There is a limited amount of similar gas
in the world. Such gas is ideal feed for gas based chemicals.
The design capacity of the future gas chemical plant is 1,200,000 tonnes per
year, which suggests a lot of feed. However, as it turned out, the plans of the
Kazak government for the development of the country's petro- and gas chemicals
do not exactly match those of the foreign investors developing the Tengiz field.
TCO needs the by-product gas too, first of all, to maximise the yields of oil.
According to the specialists, Tengiz is a young field, but with time, the
natural pressure in the reservoirs goes down. To respond to the pressure
reduction in the future, TCO is carrying out several projects to not only
maintain the required pressure, but to also almost double the production. At the
first stage, it will be increased to 20 million tonnes a year, and at the second
stage - to 30 million. One such project - re-injection of sour gas - is
scheduled to start this year.
In addition, since 2001, TCO has independently put into operation new facilities
that enabled it to process the entire volume of sour gas and receive the so much
in demand today propane and butane. TCO has managed to bring the quality of
these products to the world standards, which allowed it to successfully sell
them in the local markets and in Europe.
Considering the above, the reluctance of TCO to commit to gas supplies for the
new gas complex in Atyrau is quite understandable. With current prices for oil,
who would like to compromise on their own plans and interests?
The parties could not find a solution to the issue for a long time. As the
national company representative explained: at first the talks concerned the
price for gas, but then gas volumes became the stumbling block.
"After long negotiations we could finally persuade the management of TCO
that the 1.8 billion cubic metres of gas that would not be re-injected in the
reservoir and instead would be fed to the gas chemical complex would not
significantly affect the oil production at Tengiz," Dosmuratov said.
Considering the circumstances, it's hard to imagine how the Kazak side managed
to commit TCO to such volumes of gas. Most probably, in return, TCO will be
offered some privileges or business propositions. According to the national
company representative, the work to attract investments for the future gas
chemical complex will be continued after the signing of the feed contract. The
project cost is US$ 5.2 billion, so KazMunaiGas will not afford it on its own
and will have to raise funds.
The new plant is expected to produce polyethylene and polypropylene, which, in
their turn, will be used as primary material for more expensive products.
Interestingly, only 20 percent of the complex's future output will go to the
local market. The rest will be exported to China, Russia, Turkey, and Europe. So
the expected revenues from the new production are promising.
FORESTRY & PAPER
Kazakstan Kagazy in US$350m IPO
Kazakstan Kagazy, the paper and packaging producer and property developer, is
set to raise US$350 (£174m) for its initial public offering on the London Stock
Exchange recently, the Financial Times reported.
The company said shares, in the form of global depositary receipts (GDRs), would
be offered at between 750 cents and 950 cents a share.
The fundraising exceeded Kagazy's initial plans to raise about US$300m and the
figure could rise to US$402m if an over-allotment option is exercised in full.
The price will give Kagazy, central Asia's largest producer of paper, a market
capitalisation of between US$650m and US$750m. Its other assets include Peak, a
subsidiary company with about 500 hectares of real estate outside Astana, the
The offering includes US$275m of primary shares to be issued by Kagazy as well
as the sale of US$75m of shares offered by some of its main shareholders.
The shares are majority-owned by Maksat Arip, chief executive, and Baglan
Zhunussov, chairman. "The offering on the London Stock Exchange will help
us strengthen our position as a major industrial group in Kazakstan with a
diversified set of interests in paper and industrial real estate, broaden our
investor base and fulfil our set of objectives," said Mr Zhunussov.
Kagazy is the latest in a string of fast-expanding companies from the central
Asian republic coming to London in search of capital and a higher profile.
The country has one of the region's fastest-expanding economies with a banking
system more developed than that of its neighbours, Russia and Ukraine.
Most companies have opted for a secondary GDR listing instead of a primary
listing of shares as legal requirements are less onerous.
Kazakmys is the region's only company to have a primary listing although another
mining group, Eurasian Natural Resources Corporation, is considering a primary
listing in London.
A depositary receipt represents ownership of a number of a company's shares and
can be listed and traded - in a different jurisdiction - independently of the
underlying stock. ING is the global co-ordinator, bookrunner and lead manager.