Archive for June 2010
Kazakhstani and Russian companies are waking up from the crisis and are now starting to plan asset placements and gaining additional funds. There about 77 IPOs expected to be floated by CIS companies this year, and most activity shows that 66% of all potential IPOs are Russian companies, with Kazakhstan representing 8% of the total. According to PBN IPO Tracker companies in the metals and mining, financial and transport sectors are the most keen on offering shares in Moscow, London and Hong Kong.
This year Hong Kong Stock Exchange seems to be more attractive to many companies after Rusal’s successful IPO that lead many mining companies to plan own IPO there. Asia is a major client of many metal companies. Secondly, at the Hong Kong Stock Exchange is much easier to post assets because it requires fewer documents, and the procedure is easier. Finally, IPO in Hong Kong takes much less time than in London.
Regarding Kazakhstan, there are 7 companies that already plan future initial placings, mostly from the mining and financial sectors. Sovereign wealth fund Samruk-Kazyna plans to sell off some biggest companies. All these companies have not decided yet which stock exchange is best for them, but it is clear that a listing on LSE or Hong Kong Stock Exchange is likely; through foreign stock exchanges they can raise more capital than on the Kazakhstan Stock Exchange.
IPO · Kazakhstan · Russia
Moscow Interbank Currency Exchange (MICEX) is considering partially reimbursing small- and medium-sized enterprises for IPO-related expenses on the innovations and investments market (IIM).
According to the Executive Director of the Representation of MICEX in Krasnodar, Pavel Maleev, the stock exchange is discussing different options of utilizing existing infrastructure on the IIM to attract direct, venture and portfolio investments. It is ready to compensate up to 50% of incurred costs for listings agents, legal assessments and other necessary procedures. The move is intended to aid smaller companies – with a turnover of 5-10 million rubles – in their initial decision to float. For companies in the innovation sector this decision can be quite risky, as any real return on their IPO investments will be available not earlier than 2-3 years following the initial offering.
The decision comes as part of a larger state policy targeted at nurturing domestic innovation and modernizing the sector. Recently, Russian Bank for Development (RBD) initiated a new program, Financing for Innovation and Modernization, designed to increase investments in small- and medium-sized enterprises in the innovation sector within a framework of subsidized credit resources. Both programs are intended to ameliorate the risks and costs related to IPOs and facilitate long-term investments in this key sector of the Russian economy, which to date lags behind foreign competition.
finance · innovation · IPO
On June 23, the U.S. and Ukraine formally signed an agreement on the resumption of Overseas Private Investment Corporation activities in Ukraine, thus ending a ten-year-old dispute over an insurance claim to the U.S. sponsorship of a project in Ukraine. OPIC Acting President Dr. Lawrence Spinelli was on hand to welcome this move after years of U.S. efforts to put an end to the dispute that some analysts estimate has cost Ukraine $5-10 billion in lost U.S. investment and shaken investor confidence.
“I believe that OPIC will be assisting Ukraine, and we will work together to improve the investment climate to showcase that Ukraine is indeed a country where any foreign investor, a U.S. investor in particular, can do business successfully,” said Ukraine’s recently-installed Ambassador to Oleksandr Motsyk. He went on further to say that Ukraine had attracted a total of $1.3 billion of U.S. investments to date, which is a remarkably low figure for such a powerful economy as the U.S.
The renewed partnership with OPIC is expected to bring more private investments into all sectors of Ukraine’s economy, which will translate into thousands of new much needed jobs, tens of millions in income and taxes for the country at a time when it is trying hard to recover from the economic crisis. Above and beyond, it will send a positive signal to potential investors that now Ukraine is more ready for investment than it’s been ever before.
What to look for during Medvedev’s U.S. visit.
President Dmitry Medvedev arrived in California late last night and will spend today visiting high-tech companies in Silicon Valley, including Google. He is expected to speak tonight at Stanford University. Tomorrow he meets with President Barack Obama and the U.S. Chamber of Commerce. Below are some business and economic issues to watch for during his visit.
Oil Company TengizChevroil (TCO) paid $3.5 million in environmental pollution fines to Kazakhstani Government for flaring gas at the Tengiz oil field in June 2010, reports Vesti.kz. Earlier this year a $330,000 fine was slapped on Agip KCO for pollution at the Kashagan oil field.
Clearly, the Kazakhstani government is tightening regulations for foreign oil and gas companies operating in Kazakhstan. In May, the Ministry of Environmental Protection officially announced the creation of a special commission that will supervise how oil companies working in Kazakhstan are complying with local ecological legislation. Kazakhstan was the first country in the region to have taken an active part in creating ecology legislation under the World Bank’s Global Gas Flaring Reduction program that aims to support oil companies in their cooperation with governments to reduce the flaring of associated petroleum gas.
Moreover, Kazakhstan is taking part in the EU-sponsored INOGATE initiative to strengthen measures to protecting the environmental impact of the oil and gas industry in the Black Sea and Caspian Sea regions. A three-day seminar organized by INOGATE is currently being held in Almaty, a meeting aimed to discuss these issues in Central Asia with EU participants.
If you’re interested in learning more about the investment potential in Kazakhstan, you’re in luck. No fewer than five investment promotion forums are taking place between June 3 and July 2 with participation of top government officials. And that doesn’t even include the numerous other conferences focused on media, defense and mining sectors that were treated to investment promotion speeches for the nation’s leaders in the past few months. New events are being announced each week. While some of these events are by invitation only, the others — costing thousands of dollars — are themselves contributing to economic recovery.
The Kazakhstan government’s primary message is built on the State Program of Forced Industrial-Innovative Development, the latest formal strategy to diversify and develop the economy. The ongoing drama to establish the tripartite Customs Union with Russia and Belarus is fueling interest. A major element of Kazakhstan’s motivation for entering into the Customs Union is the supposed benefit it will bring to the country’s ability to attract investment. With the support of the government’s new investment strategy coupled with improved access to the vast market of the Customs Union, Kazakhstan hopes more businesses will see investment opportunities beyond the petroleum and mining industries that dominate the economy.
The amount of effort and expense going into this investment promotion campaign is striking. It’s also worth noting that each conference seems to conclude with announcements of a number of investments agreed or identified. A significant advertising campaign from state wealth fund Samruk Kazyna in major financial media, such as the New York Times, have appeared.
customs union · finance · foreign investment · Investment · Kazakhstan
Does the Shut-off of Gas to Belarus Mean that Russia Really Wants a Trilateral Customs Union?
The gas war between Russia and Belarus continues to escalate. Today Gazprom cut gas supplies to Belarus by 30%, twice the amount that the company cut supplies yesterday. Gazprom announced that it could cut up to 85% of gas exported to Belarus if Minsk does not pay its gas bill soon. President Lukashenko responded by ordering a halt to gas supplies sent to Europe via Belarusian pipelines. The shutoff is likely to have little impact on major European consumers due to reduced summer time energy requirements and the fact that Belarus supplies 10% of Europe’s total natural gas. Gazprom plans to increase gas flows through the Ukrainian gas system.
Belarus · customs union · energy · Gazprom · Lukashenko · Putin · Russia
22
UN and OSCE: Bright Outlook for Ukraine’s Agriculture
No comments · Posted by Inna_N in Uncategorized
According to a joint survey conducted by the UN and OECD, Ukraine will become a global agricultural leader in the near future, together with Brazil, China, India and Russia. The experts expect the agricultural sector of these emerging economies to develop three times faster compared to other advanced economies. Such rapid growth prospects are due to the rising incomes and urbanization.
Brazil is forecast to see the fastest growth in agriculture. It will reach more than 40% by 2019. China and India are expected to see growth of 26% and 21%, respectively. Projections for Russia and Ukraine are 26% and 29%, respectively.
Oleg Deripaska bought 10% of the Hong Kong Mercantile Exchange (HKMEx) last week, and with it a seat on the commodity stock exchange’s Board of Directors. Deripaska has been championing Hong Kong as a fund-raising destination for Russian companies since he floated UC Rusal on the Hong Kong Stock Exchange for $2.24 billion in January. Deripaska’s decision to buy a stake in the exchange, as well as his plans to IPO energy company En+ in Hong Kong in late 2010, shows that he remains a fervent Hong Kong evangelist.
But can he convince his peers? So far, UC Rusal does not seem to have started a trend for Russian companies to IPO in Hong Kong. According to the PBN IPO Tracker, just 6 of the 77 companies currently planning IPOs have declared their intention to list in Hong Kong.
Until autumn of 2008 the Kazakhstani banking system was the most successful in the region. Kazakhstan was the first among the CIS countries to experience the negative jolt of the global financial crisis, which led to the decrease in the possibility of obtaining foreign loans for Kazakhstani banks.
Last year, President Nazarbayev noted that as a result of the crisis, “the state has to compensate all costs as a lender of last resort to rescue banks on the brink of bankruptcy, support deposits, protect the holders, and support small and medium business.”
Since then, the government actively worked to save banks. Temirbank, Astana Finance and Alliance Bank have already completed the restructuring process. Recently, BTA Bank’s restructuring plan was approved by the Agency on Regulation and Supervision of Financial Markets and Financial Organizations (FMSA). Samruk Kazyna, Kazakhstan’s national wealth fund, will keep 81.5% of shares in the bank.
CIS · finance · Kazakhstan
