"People's IPO" is a programme that enabled citizens of Kazakhstan to buy shares of major national companies and thereby not only receive a part of their potential profit, but also participate in their development.
IPO is an abbreviation of initial public offering. This term means a financial transaction, in which the company for the first time offers the general public to buy their shares.
People’s means that the shares shall be sold primarily to individuals - citizens of Kazakhstan.
How is the People's IPO beneficial for the programme companies?
Imagine a company that, having decided to expand its operations, needs money.
It is unprofitable to take a loan from a bank; you have to overpay interest and mortgage property. Also, the bank’s tight repayment schedule makes it difficult to proceed with business as usual.
Fortunately, in global financial practice, there is an alternative to bank loan, which is to brining in an investor.
How is the “People's IPO” beneficial to the citizens of Kazakhstan?
The shares can bring Kazakhstanis profit because of the development and growth of the company in two ways: though annually paid dividends, and through growth of share price on the market.
The frequent question: "Why the price would rise?" This process is actually very complex so that it would require special mathematical simulation. But in simple terms the stock prices are driven by demand.
The People’s IPO Programme include the most stable companies, most of which generate their income from operations in Kazakhstan and thus not affected by the situation on the global markets.
This stability attracts investors, which supports the demand for shares, and, hence, the prices.
Why the government needs the People's IPO?
Firstly, for the government, “People’s IPO” is a way to attract people’s money in the development of the country's economy.
Now, most of the savings of the population are on bank deposits, and as such they are not directly involved in the development of Kazakhstan. Apparently, to change the situation, the government had to provide the citizens of Kazakhstan an alternative.
They should be able to choose between a bank deposit or investment in stocks. However, Kazakhstanis should clearly understand how these financial instruments work.
Secondly, “People’s IPO” will help to solve an important problem - the development of the stock market in Kazakhstan. High activity of the population on security market attracts large investors who bring a lot of money to our market. This is crucial for our economy.
Thirdly, the government through the programme distributes national wealth among the citizens of the country. A new financial instrument for increasing capital should contribute to the growth of their welfare, and hence the growth of the welfare of the entire nation. In fact, this is an investment in the people of Kazakhstan.
In January 2011 the Company was included in the first echelon of participants of People's IPO.
On 18 December 2014, as part of the People’s IPO programme, an initial offering of ordinary shares of KEGOC JSC was held on the Kazakhstan stock market through subscription. The number of placed ordinary shares of KEGOC in the Kazakhstani organized securities market is 25,999,999.
It was announced that the stock of 10% minus one share of the company, which is 25.9 million ordinary shares at a price 505 tenge each, would be floated.
The profitability for shareholders since the placement of shares is 316%.
Total dividends paid from the date of placement as 2019 is - KZT 100 450 522 090,2