Samruk Kazyna to remain major shareholder of Air Astana after the company’s IPO

The national company Samruk Kazyna doesn’t plan to sell its stake (51%) in Air Astana entirely within the company’s IPO scheduled for 2024. According to Dastan Adikhodzhaev, head of the privatization and asset restructuring department in Samruk Kazyna, the holding plans to sell about 5% to 10% of the shares it controls. Once the move is done, the holding will cease to be the controlling shareholder.

“We won’t sell the entire stake (51%). That’s for sure. The fund will remain a major shareholder, just not controlling. We want to reduce control. We will offer the market a small stake, 5% to 10%. In addition, we are expecting that Air Astana will issue an additional number of shares,” he told Kursiv.Media.

The company’s IPO has been the subject of negotiations since 2011 when the company was added to the privatization list in Kazakhstan. During the press briefing, Adikhodzhaev explained that Air Astana’s IPO has been postponed several times, «primarily because of the COVID-19 pandemic» (which began in 2020). As the official noted, the company has been ready to go public since 2018, both in terms of the necessary documentation and in terms of the company’s performance. He also underlined that the State Commission on Modernization reached a preliminary arrangement on the structure of the company’s IPO on October 12.

In 2019, a representative of Samruk-Kazyna said that the British shareholder (BAE Systems, which controls 49% of the company’s shares) was also ready to offer part of its stake in the IPO. BAE Systems has already given its preliminary consent to do so.

In October 2022, Yernar Zhanadil, former managing director for development and privatization in Samruk Kazyna, told Kursiv that «no decisions on the structure of the deal were made.» In June 2023, he said that BAE Systems insisted on placing shares on an international stock exchange. However, the national legislation of Kazakhstan requires any company that wants to go public on an international exchange to also place at least 20% of its shares on a Kazakhstani exchange.

«We know that they (Air Astana) are ready for an IPO. We even managed to find a good reputational investor. This is such an anchor investor for this IPO. However, we have to respect the position of the company’s shareholders. They are saying that Air Astana should be listed on the international exchange and local exchanges simultaneously,» Zhanadil said at the time.

Earlier this year, Peter Foster, CEO of Air Astana, told President Kassym-Jomart Tokayev that the airline’s IPO would take place in 2024. In his address to the nation, Tokayev also instructed Samruk Kazyna to hold a «People’s IPO» of Air Astana in 2024.

Samruk Kazyna controls a 51% stake in Air Astana, while 49% is owned by BAE Systems (Kazakhstan), a subsidiary of the British BAE Systems plc, which develops, delivers and maintains defense and aerospace systems.

Air Astana was established in September 2001 by a government decree. The principal task of the company is to support regular domestic and international passenger flights, although Air Astana also provides cargo and mail transportation services. The first flight in the company’s history took place in May 2002 and was conducted by a Boeing 737 flight from Almaty to Astana. The Air Astana group includes two airlines: Air Astana and Fly Arystan, which in fact are one legal entity.

As of June 30, 2023, the company’s share capital comprised 17,000 authorized, issued and fully paid ordinary shares with a par value of $310.36 per share. In July 2022, Air Astana increased the number of authorized ordinary shares from 17,000 to 1.7 million. (These weren’t outstanding as of the moment the financial statement for the first half of 2023 was published.)

Over the first six months of 2023, the company reported $22 million in net profit over $10 million in the same period last year. The company’s total revenue increased by a third to $502 million. Revenue from passenger transportation grew by 29% to $487 million, a significant increase compared to the first half of 2022 ($376 million).

The operating profit of the company also grew by a third, from $39.4 million to $52.9 million. The airline also reported an increase in assets from $1.220 billion to $1.256 billion; liabilities rose from $1.071 billion to $1.100 billion, and shareholders’ equity increased by $6.7 million to $155 million.

As of June 30, 2023, the company’s retained earnings amounted to $142 million ($135 million in 2022, $56.5 million in 2021 and $23.8 million in 2020). The company didn’t accrue or make dividend payouts over the period from 2019 to 2021. The last dividend payout was made by Air Astana in 2018 when it spent for this purpose 30% of its net profit obtained in 2017 ($26.9 million). In March of this year, the company said that it would pay 20% of the group’s net profit obtained in 2022 ($15.8 million). The dividend payouts were made on May 26, 2023.