Air Astana is preparing for IPO

Does the company’s British co-owner agree with the move?

BAE Systems, a British arms, security and aerospace company, owns a 49% share in the Air Astana airline. Does it consent to Air Astana’s decision to become a publicly traded company? According to the press service of Samruk Kazyna, another co-owner of the airline (51%), there are no obstacles to the expected IPO.

In 2001, when Air Astana was established by the government of Kazakhstan and the British BAE System, the two sides owned a similar amount of shares of the company. Now, the National Welfare Fund Samruk Kazyna, which acts on behalf of the government, owns 51% of the shares while the remaining 49% belongs to BAE Systems. As a result, the British side can block any decision by its partner, including a potential public offering of Air Astana.

Samruk Kazyna has negotiated the potential listing of the airline with the second co-owner since 2011 when Air Astana was put on the list of national companies that must go on IPO. In 2012, Kuandyk Bishimbayev, then a deputy head of Samruk Kazyna, said that the British company blocked the idea of Air Astana going public. However, Kazakhstan’s authorities later announced that BAE Systems is ready to sell a portion of its stock.

In 2019, Almasadam Satkaliyev, responsible for asset management in Samruk Kazyna at that time, said that it was crucial to get consent from the partner. He also noted that BAE Systems agreed to sell a specific part of its shares on the market.

However, the Kursiv edition asked about this agreement’s validity and was not given a clear answer by Ernar Zhanadil, executive director of development and privatization in the National Welfare Fund. The official said that the airline is ready for IPO as all paperwork was done.

“As of today, we have no concrete agreements on the potential deal, but we are going to finish this work before the company goes public as the law requires. At the same time, international best practices require that issuers and shareholders restrain from giving any public comments about a potential deal; therefore we would prefer not to disclose any information about the future of the company and the expected deal before the company’s official announcement. Now, I can’t say anything more than that,” Zhanadil said.

Kazakhstan had considered several options for the airline’s IPO. In 2012, Samruk Kazyna was going to buy the company’s shares from the British co-owner and sell about 10-15% of its shares to investors. This never happened. Later, Samruk Kazyna suggested that both shareholders sell 50% of their shares. If this happened, BAE System would control 24% of the company, the government 26%, Kazakhstani citizens 25% and the remaining shares would have belonged to other investors. In 2019, Samruk Kazyna announced another plan: to issue additional shares and sell them to the people.

In turn, BAE Systems refused to comment on “speculations about any potential options for the future of our business.”

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