Freedom Finance has presented the updated design of its logo: the word “finance” is no longer in the name of the group. Also, the holding has changed its motto to “One brand – a thousand opportunities.” So the next step is the transformation of the holding into a highly effective ecosystem, stated Timur Turlov, CEO of Freedom Holding Corp. during the annual report presentation.
Ecosystem, naming and key areas of activity
Over the past few years, the holding has turned into a huge ecosystem and the new name highlights that the company is now something bigger than just a financial company. According to Turlov, those entrepreneurs who are able to not only create different businesses but integrate them into one system may become true winners because such systems are much more effective than any usual businesses.
Thanks to that close integration within the holding, its clients can get easy access to different services. For example, a client of Freedom Bank can easily buy insurance, open a brokerage account, take a loan or buy something in installments. On the other hand, when the company knows its client better and can see his or her credit record or activity in the stock market, it is more willing to provide such a client with better credit terms or deposit rates. “When we gather and process the data, we can better understand what our clients need: cheaper and fast services or better rates,” Turlov said. He also noted that the bigger the ecosystem, the more revenue the company can get.
Currently, the group’s activity is focused on four areas: brokerage services, investment banking, banking services and investment activity. The company is eager for supporting startups and looking for new technologies and teams that can contribute to the growth of the entire holding. As a result, the group’s ecosystem includes different businesses which complement one another.
The insurance business of the group is based on two pillars: Freedom Insurance and Freedom Life. Both companies heavily rely on digital solutions and their market shares are constantly growing. Freedom Insurance claims 10% of the vehicle insurance market. “This compa
ny has changed the rules of the game and set a new standard for online selling of insurance certificates,” the businessman said.
Freedom Insurance is going to automate all its business processes: payments, the cover of losses and services for corporate clients. Freedom Life is aimed at making life insurance cheaper and easily accessible.
Freedom Mobile is another fast-growing company under the Freedom umbrella brand. Even though it is mainly focused on selling smartphones, the company also wants to play a bigger role in providing financial and insurance services. In other words, when a client buys a smartphone, he or she can also get help with mobile apps and insurance products.
The presence of a big and developed network of banking outlets used to be a huge advantage for any company, but now the situation is different, Turlov says. “We are lucky. We never had an expensive network of outlets. Now we are building small, light offices where people can get a smartphone, buy an insurance product or become a retail investor,” he added.
Last year the holding bought the payment service Paybox.money. Now the company is called Freedom Pay. Currently, this service is closely integrated into the holdings product line: merchant acquiring, installment, lending and other services. Freedom Pay claims 25% of the online acquiring market. The company’s turnover in 2021 reached $740 million with more than 82 million transactions.
Change the rules of the game and shake up the market
The banking business is one of the key areas where the holding has implemented unique digital solutions. For instance, Freedom Bank offers investment cards that are directly linked to a brokerage account. Also, Freedom Bank is considered the market leader in terms of mortgages. In terms of the national housing program “7-20-25” the bank is the second biggest market player.
“We are going to prove that young companies can change the rules of the game. They are able to shake up all those backward markets with the help of new standards. Such companies are not afraid to try something new; they cherish a new type of corporate culture and attract many highly qualified specialists,” Turlov said. However, he believes that the lending industry in Kazakhstan will thrive only if the regulator decreases the base rate and the interest rates are more balanced.
Freedom Capital Markets is expected to be a primary underwriter in the U.S.
The brokerage business is a flagship in the holding’s portfolio, although it has been created just as a tool through which investors from Kazakhstan are able to get access to the US stock exchanges.
“We always knew that bridges between the different markets might be very powerful. Any middle-class citizen in Kazakhstan can get the same investment opportunities as a middle-class citizen in the U.S. if he or she applies to our company,” the businessman noted. It is no longer a prerogative of elites and almost everyone can be a retail investor with the help of new technologies.
The holding runs a digital brokerage company that offers investor cards, remote authentification and direct access to a brokerage account. According to Timur Turlov, this company is one of the few that can offer such access to the American stock market. Moreover, the company is the only member of the NYSE in Kazakhstan. Freedom Broker supports clearing activities in the U.S. and has direct access to the Euroclear infrastructure and IPOs.
Now, Freedom goes to even greater extents: the company is planning to start providing services of investment banking in the U.S. and serve as the primary underwriter for those companies that want to go public there. Freedom Capital Markets is going to be included in the industry players’ folders soon, the CEO projected.
Europe is the second biggest market where 110,000 clients rely on the holding’s services. The company is going to expand its activities in Western Europe further. For example, Freedom Finance Europe has recently opened a branch office in Spain.
Where does Freedom Holding put its money?
The net revenue of the holding in the last financial year (ended in March 2022) grew from $143 million to $211 million. The head of the company believes that the revenue must be invested into different projects as it is more efficient than just paying dividends to shareholders.
“Although we show profitability slightly higher than many US companies do, it’s unlikely we surprise anyone with our dividends,” Turlov says as he believes that there are lots of opportunities and it is the right time for new investments.
As a result of the financial year, the company reported $3.56 in earnings per share. Last year the rate was $2.45. This rate is close to the price of the company when it went public.
“No doubts that clients who bought our stocks over the past few years won’t be sad about those investments. We are going to make it and deal with all the current shocks,” he said.
The company reported earnings of $565 million or a 60% increase over the previous year. Interest yield surged from $31 million to $92 million while income on securities has risen by 70% from $46 million to $78 million. The holding’s assets and obligations increased by $900 million and $670 million respectively.
“The market value of the holding is $2.6 billion. From this point of view, we have no problem with capital equity. This is very important, especially when Kazakhstan is going through massive changes and we can see new opportunities we couldn’t imagine before,” the entrepreneur said.
Freedom Holding Corp. is a provider of retail financial brokerage, investment consulting, securities trading, investment banking and underwriting services via its Freedom Finance subsidiaries. The company is a professional participant of the Kazakhstan Stock Exchange (KASE), Astana International Exchange (AIX), Moscow Exchange (MOEX), Saint Petersburg Stock Exchange (SPB), Republican Stock Exchange Toshkent and Ukrainian Exchange. The holding headquarter is located in Almaty, Kazakhstan; its administrative offices are in Russia and the U.S. The company also runs representative offices in Ukraine, Uzbekistan, Cyprus, Germany, Azerbaijan and the U.K. Currently, the holding’s common shares have been traded on NASDAQ, KASE, SPB Exchange and Ukrainian Exchange.