Kazakhstan Temir Zholy may hold IPO in 2025 if market situation favorable, may offer 10%-25% of shares - wealth fund

ALMATY. Dec 11 (Interfax) - Kazakhstan Temir Zholy (KTZ), the country's national railway operator, may hold an initial public offering (IPO) next year if the situation in the market is favorable, National Wealth Fund Samruk-Kazyna told Interfax.

In accordance with a Kazakh government resolution, KTZ will hold an IPO in 2025. Samruk-Kazyna JSC and KTZ are currently making necessary preparations, Samruk-Kazyna said.

"The IPO is possible if the market conditions are favorable," it said.

As part of the privatization plan, KTZ is initially considering offering from 10% to 25% of its total issued shares.

The final volume of shares to be sold will be announced during the final stage of preparations for the IPO. In any case, JSC Samruk-Kazyna will maintain a so-called qualifying majority of votes, which is at least 75% of the issued shares. In addition to the above, given that there is a high probability that the IPO will take place on the London Stock Exchange (LSE) and the requirement of the LSE on offering at least 10% of the company's stock, the volume of shares that KTZ may offer in the IPO will range between 10% and 25% of its issued shares," Samruk-Kazyna said.

The IPO will increase the company's transparency, Samruk-Kazyna said.

"By bringing large companies to the stock market, the task of improving corporate governance in companies is gradually being addressed. These companies become public and accountable to minority shareholders, ensuring transparency in their activities and compliance with ESG principles, as well as improving operational efficiency through increasing demands for their operations and adherence to best practices. As a result, the procedures for ensuring and protecting the rights and interests of minority shareholders, the activities of company boards of directors and executive bodies, as well as information disclosure processes in accordance with the requirements of stock exchanges, achieve a qualitatively new level," it said.

When asked whether KZT plans to pay dividends in the first years following the IPO, Samruk-Kazyna said, "Income from shares can be received either as dividends while remaining a shareholder, or as gains from selling shares that have risen in price. The amount of dividends will be determined in accordance with the company's dividend policy, based on its financial and economic performance and the overall economic situation. Market conditions and industry prospects also affect dividends, as do external economic factors and other considerations."

However, depending on the company's performance, dividends may not be paid annually and stock prices may decline under the influence of unfavorable factors, Samruk-Kazyna said.

Kazakhstan Temir Zholy is a transport, warehousing and distribution company, which is part of Kazakhstan's National Wealth Fund Samruk-Kazyna. KTZ operates the country's railways, the infrastructure of seaports and airports, transportation and warehousing facilities.