Air Astana to hire advisers for London IPO in early 2024

Air Astana, Kazakhstan’s flag carrier, is hiring advisers for a long-delayed initial public offering in London and at home, aiming for the first quarter of next year, according to people with knowledge of the matter.

UK defense firm BAE Systems Plc and Kazakhstan’s sovereign wealth fund — the airline’s shareholders — plan to reduce their combined ownership to about 50%, and Air Astana will also sell new shares, according to the people, who asked not to be identified as the information is not public. BAE owns 49% of Air Astana, and Samruk-Kazyna controls the remaining 51%. The company has started pitching the planned share sale to would-be investors, they said.

To ensure the airline keeps its preferential status as the national carrier, the sale will be structured to keep control in the hands of Kazakh citizens or entities, the people said, without providing further details. Air Astana could potentially fetch a valuation of roughly $1 billion based on preliminary estimates, though that number is subject to revision, the people said. The timing of sale will depend on market conditions. 

The deal, if it goes ahead, would be the first sale of a state-run Kazakh company in London since the 2018 IPO of Kazatomprom, the world’s largest uranium miner. The government has long planned to offer some of its stakes in companies but postponed most of the sales amid market turmoil caused by the Covid-19 pandemic and then Russia’s invasion of Ukraine. In September, President Kassym-Jomart Tokayev ordered the government to sell shares in Air Astana next year.

Air Astana is hiring Citigroup Inc., Jefferies Financial Group and Wood & Co. as international advisers, and Halyk Finance, BCC Invest, Jusan Invest and SkyBridge Invest for the local market, the people said. Citigroup, Jefferies, Halyk Finance and Jusan Invest declined to comment. Wood, BCC Invest and SkyBridge Invest didn’t immediately respond to requests for comment, nor did Air Astana or Samruk-Kazyna. 

“Air Astana is a thriving, well-managed business and we continue to review options to ensure its long-term success,” a spokesperson for BAE said by email, without elaborating. 

BAE Systems invested $8.5 million in the airline in 2001, and the carrying value of its stake in the airline was 63 million pounds ($80 million) at the end of 2022. That number “is not related to a potential valuation of the IPO,” the spokesperson said.

Air Astana more than doubled net income to 37.6 billion tenge ($82 million) last year. It returned to profitability in 2021 after a loss of 38.7 billion tenge in 2020, when demand for travel slumped because of the pandemic. The company also operates low-coster FlyArystan, which accounted for about 14% of total operating profit last year. 

The government returned to its share-sale program with the IPO of national oil producer KazMunayGas in December and an additional share sale of grid operator Kegoc this month. Both were on the domestic market.