Goldman Sachs-backed Kaspi revives London IPO plans

Written by Ruby Hinchliffe
7th October 2020

Kaspi, the ecommerce banking app which dominates Kazakhstan’s digital payments and counts Goldman Sachs as an investor, is bringing its initial public offering (IPO) plans in London back to life.

First reported by Reuters, the plans to float arrive a year after Kaspi abandoned its first attempt to float in England’s capital.

The fintech holds a 65% market share of Kazakhstan’s digital payments flow.

Kaspi, which operates the third largest bank in Kazakhstan, wants to sell shares held by a host of its owners.

Kaspi’s owners

As well as Goldman Sachs – which owns 4% – Kapsi is also 35% owned by Baring Vostok, one of Russia’s largest private equity investors.

Co-founders Mikheil Lomtadze and Vachislav Kim, own the remaining 29% and 32%, respectively.

Whilst these owners will sell some of their stakes, they will also retain a portion. It is not known how big these portions will be.

Why now?

Kaspi tells Reuters that Yandex’s planned takeover of Russian online bank Tinkoff, which resulted in a “comparative valuation”, appeared to be well received by the market – hence the inspiration to revive its own IPO.

The fintech, which holds a 65% market share of Kazakhstan’s digital payments flow, has actually aborted its IPO twice. Once following WeWork’s failed IPO in October, and then again earlier this year due to coronavirus.

“In the midst of the COVID-19 pandemic, our super app has become more important and essential than ever,” says Lomtadze in a statement.

“As people’s daily lives become increasingly digitalised we expect the relevance of Kaspi’s ecosystem to the unfolding digital future to only increase.”

Managing director hired this year

David Ferguson, Kaspi’s managing director, was brought on board at the beginning of this year. His addition was specifically to help Kaspi navigate its London-based listing.

Ferguson spoke to FinTech Futures in June. He describes Kaspi as a mix between Alibaba’s ecommerce offering, Ant Financial’s payments platforms, and WeChat’s social peer-to-peer (P2P) payments platform.

He said the fintech has been able to build scale “in a region which has gone under the radar”. Kaspi is currently expanding its offering into neighbouring commonwealth independent states (CIS), starting with Azerbaijan.

What the IPO could look like

Headed up by Ferguson, Kaspi will issue global depositary receipts (GDRs) on the London market sometime in November.

Though the fintech has not provided any financial details, its delayed listing last year might give some idea of the scale. It targeted a $5 billion valuation through a minimum offering of $500 million worth of GDRs.

If successful, the IPO would make Kaspi the first Kazakh finance group to list in London since 2007. It would also become the first Kazakh company to float since uranium miner Kazatomprom listed two years ago.

Morgan Stanley and Citigroup Global Markets are co-ordinating Kaspi’s float, with Renaissance Capital acting as joint bookrunners.

Evolution of Kaspi

Kaspi serves some eight million users in its home market. The initial hook was payments, allowing users to pay P2P to both friends and small businesses, pay bills, and send gift payments.

But overtime, the app has fleshed out its offering, morphing into a ‘super app’. It lets users log onto their tax accounts through the app, plug in meter readings for bills, and purchase items. Be that household appliances or loans – through its marketplace. It also has the option of paying in instalments like Klarna, except without the interest.

Last year, Kaspi made a $515 million profit. Whilst $74 million of this was through its marketplace, $369 million came from its fintech platform, and another $73 million came from its payments business.

Ferguson said in June that the company holds a 45% share of Kazakhstan’s entire ecommerce market, towering over competitor AliExpress which holds just a 15% share.

Logistically, Kazakhstan should be a very hard country to do ecommerce well in. Its land mass – 2.725 million square kilometres – is huge when you consider its population size.

So, getting scale should be hard, but since Kaspi launched its ecommerce offering in 2014, it has acquired more than 40% of the overall population as users.