Kazakhstan Temir Zholy (KTZ), the national railway operator and a subsidiary of Samruk-Kazyna, intends to raise up to $5 billion through an initial public offering (IPO), targeting a total business valuation of up to $30 billion. The information was reported by Hong Kong financial publication etnet and highlighted by the Kazakhstan Association of Minority Shareholders (QAMS).
IPO could launch in October
The KTZ IPO could begin as early as October, although a postponement to 2027 remains possible. etnet did not specify the size of the offering, although previous media reports have mentioned up to 20% of KTZ’s shares.
KTZ plans a triple listing on the Astana International Exchange (AIX), the London Stock Exchange (LSE) and the Hong Kong Stock Exchange (HKEX). The company plans to use the proceeds to repay part of its existing debt and finance investment projects, including the development and modernization of railway infrastructure and rolling stock.
Valuation raises questions
The company’s projected valuation has raised questions among market participants. According to Bloomberg data cited by QAMS, there is a significant discrepancy between KTZ’s valuation by its sole shareholder, Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, and valuations by independent investment banks.
KTZ also carries significant debt. QAMS previously noted that the company had exceeded the gearing ratio set out in its credit agreement.
The key question, according to the association, is how potential investors will respond to an IPO by a highly leveraged company at a potentially high valuation, particularly in light of the experience of Air Astana’s listing. Samruk-Kazyna owns 41.18% of Air Astana, whose shares are currently trading at a discount of about 40% to their IPO price.
