The biggest Kazakhstani MFO changes its form of ownership

KMF, the biggest microfinance organization (MFO) in Kazakhstan, has changed its form of ownership, transforming itself into a joint stock company. Previously, it operated as a limited liability company.

No changes for creditors, customers or partners are expected, though. Moreover, neither corporate details of the company nor its headquarters location will change, the legal entity said in a statement.

«This is a pivotal moment for our company. We’ve pursued this transformation into a joint stock company persistently and consistently. This move has a great symbolic meaning for us because it shows our determination and commitment to sustainable growth and development, allowing us to offer innovative financial solutions and effective support to micro-entrepreneurs,» said Shalkar Zhusupov, chair of the board of directors of KMF.

According to the company’s financial statement published earlier this year, KMF will transform itself into a commercial bank in 2024.

Any entity should have at least $22.5 million in registered and equity capital to be officially registered as a bank in Kazakhstan. In February 2024, KMF increased its registered capital from $32.4 million to $112.5 million. The company also wanted to issue 50 billion common shares for 50 billion tenge ($112.5 million).

KMF was established in 1997 with the support of the United States Agency for International Development (USAID) under the name of the «Kazakhstan Community Loan Fund.» In 2006, the company was renamed KazMicroFinance. It’s been operating under the KMF brand since 2015. As of 2023, KMF was ranked the biggest microfinance company in Kazakhstan in terms of assets.

Last year, KMG reported $29.7 million in net profit, a 1.1% increase over 2022 ($29.2 million). The company’s assets grew by 18.9% to $648.8 million, while liabilities increased by 23.2% to $531.3 million. Equity capital, on the other hand, decreased by 0.1% to $117.4 million.

As of late 2023, there were several owners of KMF, including ACDI VOKA, an international development nonprofit organization based in the U.S. (60.43% through KMF-Demeu), Triodos SICAV II and Legal Owner Triodos Funds (7% and 9.5%, respectively; part of Triodos Bank in the Netherlands), MultiConcept Fund Management S. A. (16.6%), an investment firm from Luxembourg controlled by Swiss bank UBS AG and M&G, a Swiss management company that controls a 0.04% stake in KMF through responsAbility SICAV. The remaining 6.2% of shares belong to executives and staff of the company.

KMF announced its intention to transform itself into a bank in August 2021. At the time, Zhunusov said that the timeline for the move would depend on the technical, financial and IT capabilities of the company. The same plan of transformation was also announced by another microfinance organization OnlineKazFinance (which operates under the brand Solva).

In May 2021, Madina Abylkassymova, head of the Agency for Regulation and Development of the Financial Market (AFRDM), said that the regulator would let big microfinance organizations transform themselves into banks. In July 2022, President Kassym-Jomart Tokayev signed a law that allowed MFOs to go through such a transformation without a pause in their operations.