³ÉÈËÓ°Òô

Kazakh fintech company Joint Stock Company Kaspi.kz (Kaspi.kz) the postponement of its IPO this week, citing ‘currently unfavourable and uncertain market conditions, particularly in the technology sector’ as a key reason behind its decision not to go ahead. In the announcement, released on 7 October, Chair Mikheil Lomtadze stated ‘We are pleased with the very strong interest shown by investors and their very high level of engagement in the process. However, we've come to the decision that the timing is not the best at the current moment for an IPO.’

Incorporated and listed in Kazakhstan, Kaspi.kz   its intention to admit its global depositary receipts (GDRs) on the standard listing segment of the Official List and to trading on the Main Market of the London Stock Exchange (LSE)  on 16 September 2019, just three weeks before the decision to pull the float. The company had published a document and on 23 September 2019  its intention to proceed with the IPO with an expected admission date of October 2019. At the time, the board highlighted the company’s ‘unique and powerful business model with significant network’ and plans that included expansion to ‘new products and territories, including Central Asia and the Caucasus region.’

The postponement of the IPO is the latest blow to the London Stock Exchange, which has seen an increase in postponed and cancelled IPOs over the past year. This is supported by research conducted by Market Tracker indicating that the volume of IPOs has hit a five-year low and has decreased by 56% in the first three quarters of 2019 in comparison to Q1 – Q3 2018.

In addition to a weak market for companies opting to go public, there has been an increase in companies performing poorly post-IPO, possibly further dampening the desirability of a London listing. Aston Martin Lagonda Global Holding plc listed on 3 October 2018 at a price of £18.10 per share, immediately qualifying for entry to the FTSE 350. The high was short lived. On 19 July 2019 Aston Martin a partial cash offer from European equity fund Investindustrial Advisors Limited for an offer valuing the company at £68.4 million with a consideration value of just £10 per share and just over a year after listing the share price had plummeted by 76% to £4.33 a share. Similarly, Funding Circle Holdings plc listed on 28 September 2018 with a closing price of £4.39 per share, yet on 8 October 2019 its share price had dipped to £0.97 per share.

Despite political uncertainty and unfavourable trading conditions plaguing the LSE, our data indicates a steady level of foreign interest, with over 20% of all IPOs this year conducted by companies based outside the UK. On 9 October, Egyptian company The African Export-Import Bank announced an intention to float GDRs in a transaction expected to be in excess of £2 billion. In addition, mining specialists JSC National Atomic Co Kazatomprom, another Kazakhstan-based company that had on the LSE on 16 November 2018, recently conducted a secondary offering in an attempt to increase its free float to about 18.8% and stabilise its offer price. In an , the company stated that the move was in regard to  â€˜consistent feedback regarding the low trading volumes for Kazatomprom's shares; we believe today's development is a positive step toward improving those share trading volumes.’

The Market Tracker team will continue to monitor developments in the IPO market. All the transactions referred to can be found via out deal analysis tool (a subscription to PSL Corporate is required).