Uzbekistan investment fund rose in price in London after IPO by $604 mln

Uzbekistan National Investment Fund (UzNIF) rose in price on the first day of trading in London, May 13, after the government sold a stake worth $604 million, Bloomberg writes. The fund's portfolio includes stakes in 13 major companies in the country, including Uzbekistan Airways.

The fund's Global Depositary Receipts (GDRs) listed on the London Stock Exchange opened May 13 at $26 per paper - above the offering price of $25, at which the Ministry of Economy and Finance of Uzbekistan sold 23.4 million securities, the exchange said. In total, the ministry sold 31% of UzNIF on the London and Tashkent exchanges for $604 million on Ma 12, which valued the fund at $1.95 billion in total.

The principal investors in the transaction were BlackRock, Franklin Resources, Redwheel and the Allan & Gill Gray Foundation, which agreed to acquire the fund's GDRs for approximately $300 million.

Among the organizers of the placement are Jefferies Financial Group, Raiffeisen Bank International, and Abu Dhabi Commercial Bank.

UzNIF is managed by Templeton Global Investments, a division of the US investment company Franklin Templeton. The fund owns stakes from 25% to 40% in 13 major companies in Uzbekistan from the public utilities, energy, telecommunications, banking and transportation sectors. The largest asset of UzNIF is the national airline Uzbekistan Airways, which last year carried about 6.6 million passengers, Bloomberg notes. Other major assets in the fund's portfolio include telecom operator Uzbektelecom, hydropower company Uzbekhydroenergo, railway Railway Infrastructure Company and SQB Bank.

Some of the fund's portfolio companies, including an airline carrier, are also preparing for their own IPOs in the coming years, the agency notes.

"Front-loaded risks (front-loaded risks) may put pressure on the securities' performance in the short term," analysts at Römer Capital, led by Alex Kantarowicz, wrote May 7. They noted that similar funds are trading at a discount. "In our opinion, the optimal strategy is not to participate in the IPO, but to buy securities on the secondary market at a more attractive price with the expectation of a long-term perspective," they pointed out.

Römer Capital has estimated the total fair value of UzNIF at $2.7 billion, but expects the auction to proceed based on a net asset value of $2.03 billion, or about $26 per GDR. Römer Capital's valuation implies a potential upside of about 38% relative to the IPO valuation.

The IPO of Uzbekistan's National Investment Fund was part of the country's plan to transition to a more market-oriented economy, Bloomberg writes. About 3% of the offering went to the Tashkent Stock Exchange, where the fund's primary listing is located. Securities in Tashkent were sold at 4.65 soums per paper, while retail investors were given a 5% discount. The fund's securities are traded under ticker UZNF.

This article was AI-translated and verified by a human editor