The Business Year

Marcia Elizabeth Christian Favale-Tarter


Grasp the Chance

Senior Advisor to the Prime Minister, Kazakhstan


Marcia Elizabeth Christian Favale-Tarter has two decades of finance experience. Through her company M. Favale-Tarter, she has acted as an Independent Restructuring Advisor to BTA Bank, Alliance Bank, and Astana Finance, devising the restructuring strategy and its implementation. She is known for her credit analysis and investment experience. In 2006, she was ranked globally by Institutional Investor as the No. 1 Credit Analyst for Emerging Market Corporate Bonds.

Preparations for Kazakhstan’s self-styled People’s IPO program are now well underway. The program received its approval in parliament in Astana back in August 2011, and the first candidates designated for […]

Preparations for Kazakhstan’s self-styled People’s IPO program are now well underway. The program received its approval in parliament in Astana back in August 2011, and the first candidates designated for listing in 2012 are busy preparing themselves for the challenges of being public and listed corporations.

The framework and structure of the People’s IPO was devised in Kazakhstan and is supported by President Nazarbayev. The value proposition of the program is the establishment of a wealth conduit for the people of Kazakhstan to have the opportunity to share in the growth of the country’s leading companies and assets. The first candidates for the IPO program are the electricity grid company KEGOC, the oil pipeline company KazTransOil, and the country’s flagship airline, Air Astana. These are companies that are intrinsically linked to the growth of the economy. Other leading companies within Samruk-Kazyna’s portfolio are scheduled for subsequent offerings between 2013 and 2015.

The People’s IPO, in this phase, is entirely domestic in its focus, putting Kazakhstanis first while international participation is expected to come at a later stage. A welcome aspect of the program would be for the Kazakhstan Stock Exchange (KASE) to become an investment destination not only for Kazakhstanis, but also, in the future, for international investors looking for Kazakhstani or regional exposure. We see this dynamic in other emerging markets around the world, and we are keen to see it take off in Kazakhstan, with all the associated positive effects.

The People’s IPO should not be compared to the privatizations of the past. Kazakhstan is approaching this program from a position of economic strength and not from a need to attract capital to plug a hole. It’s a structural initiative of the government, aimed at developing the domestic capital markets, to encourage an internal investment culture, and thus provide an avenue of wealth creation. In the long term, it is intended to encourage and ultimately diversify economic activity, which will benefit all Kazakhstanis.

Given the objective to make this a true People’s IPO, and thus engage individual Kazakhstanis as investor partners, accessibility and affordability are key performance metrics. We envisage pension funds playing an important role in reaching a substantial part of the population. The pension funds already reach more than 8 million people, or about 50% of the population, and a substantial part of the population has savings in the pension funds. In addition to the distribution strength of the pension funds, such a system removes disposable income barriers because it utilizes cash that is already committed, making affordability a non-issue. We do envision the development of independent brokerage accounts as well.

One very important aspect of the People’s IPO will be successfully addressing the knowledge base of the general public about their broader savings and investing in shares. Although steps are being taken to mitigate certain risks and improve the investment profile of companies participating in the program, it is very important that people understand what it means to invest and the risks and returns that an investment can generate.

The People’s IPO process is well advanced and a lot of preparatory work has already been completed in areas related to legal, accounting, and compliance. The selected companies have undergone and will undergo a comprehensive due diligence process that would be applied anywhere else in the world. Samruk-Kazyna, together with the government, has assembled a team of competent advisors, independent and otherwise, to ensure that the program is both successful and adheres to best market practices.

There is some skepticism from the public and from the opposition toward the program, but let’s remember that at the time of the financial crisis in 2009 when the government began the restructuring of certain domestic banks, it faced the same skepticism. Some people said they did not believe the government, and that the banks would go bankrupt soon. But the banks met the challenge, and the burden-sharing framework, devised internally with independent advisors working alongside the government, has become a model considered globally. Other countries are now considering Kazakhstan’s approach. Like the restructuring of the banking system, the concept of the People’s IPO was similarly designed in Kazakhstan. It is a truly Kazakhstani project.

I am confident that the intention of the government is to make this program accessible, equitable, and ultimately successful. It promises to be an exciting stimulus to Kazakhstan’s business and investment culture, and to further establish the country as an important hub for the capital markets across Central Asia. This is an opportunity that the people of Kazakhstan should grasp.



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