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Kazakhstan delays listing of state oil firm as UK IPO market stalls

Tepid investor appetite due to Brexit, US political tensions and the trade war are to blame, it says


KAZAKHSTAN has deferred an initial public offering (IPO) of national oil firm KazMunayGaz to beyond 2019, two banking sources said, slowing the pace of the country's privatisation plans and inflicting another blow to London's stalling IPO market.

The decision is partly due to tepid investor appetite for stock offerings, due to uncertainty about Brexit, US political tensions and a global economic slowdown, topped off by the US-China trade war and sanctions against Iran and Russia.

KazMunayGaz (KMG) and its main shareholder, Kazakh sovereign wealth fund Samruk-Kazyna, did not respond to requests for comment.

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The Kazakh government invited international investment banks in September to pitch for roles in the listing of KMG, sources said then, part of a broader plan to list crown jewels such as its telecom and railway operators and reduce the presence of the state in the economy to 15 per cent by 2021.

Sources put the company's potential valuation at around US$6 billion. KMG accounts for 28 per cent of the total crude oil and gas condensate production volume in Kazakhstan and 16 per cent of natural and associated gas. It has more than 89,000 employees.

Last year, Kazatomprom, the world's largest uranium producer, was floated in the first listing of a large Kazakh state company in more than a decade.

But work on KMG has stalled, the sources said, as market conditions worsen.

Proceeds from IPOs worldwide fell by 83 per cent to US$2.6 billion in January compared with the same month last year, Refinitiv data shows.

There were just six energy-related IPOs on the London Stock Exchange in 2018, down from eight the previous year, its website shows. None were issued in the last quarter.

The listings of Saudi Aramco, the world's largest oil producer, and Spanish energy company Cepsa were among high-profile oil deals halted last year.

Oil trader Vitol also pulled its IPO of Varo Energy, blaming poor market conditions.

Beyond the energy sector, several London IPOs have failed or performed poorly, with carmaker Aston Martin and financial technology firm Funding Circle trading down sharply from their debut prices.

Although KMG is listed already in Almaty, it has no free float - or easily tradeable shares - and no actual IPO took place. It was listed to facilitate the sale of a 10 per cent stake to the central bank in 2015. REUTERS