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Privatization

1. BACKGROUND INFORMATION ON THE COMPREHENSIVE PRIVATIZATION PLAN FOR 2016 – 2020

The Comprehensive Privatization Plan for 2016–2020 approved by the Resolution No. 1141 of the Government of the Republic of Kazakhstan “On Some Issues of Privatization for 2016–2020” dated December 30, 2015 (hereinafter referred to as the “Comprehensive Plan”) is the key element in the transformation of Kazakhstan’s economic strategy.

The Comprehensive Plan aims to support Kazakhstan’s economic growth in the context of low commodity prices within joining the World Trade Organization and planned accession to the Top 30 Developed Countries and the Organization for Economic Cooperation and Development (OECD) in the coming years.

The main goal of the privatization program is to increase the efficiency of asset management by reducing the state’s share in the economy to 15% in GDP in the medium and long term outlook.

The new plan covers privatization of the Top 65 governmental organizations, companies and development institutions of the country, as well as about 700 subsidiaries and affiliates, as well as national and public assets.

The privatization program provides various forms of sale: from electronic auctions to direct targeted sales. The privatization schedule will depend on the prevailing market conditions and the interest of public and private investors in assets. It is expected that after the acquisition of companies, potential investors continue actively investing in the country's economy.

 

2. CURRENT STATUS OF “BAITEREK” ASSETS PRIVATIZATION

The Comprehensive Privatization Plan for 2016–2020 approved by the Resolution No. 1141 of the Government of the Republic of Kazakhstan “On Some Issues of Privatization for 2016–2020” dated December 30, 2015 (hereinafter referred to as the “Comprehensive Plan”) is the key element in the transformation of Kazakhstan’s economic strategy.

In accordance with the Comprehensive Privatization Plan for 2016–2020 approved by the Resolution No. 1141 of the Government of the Republic of Kazakhstan dated December 30, 2015 (hereinafter referred to as the “Comprehensive Privatization Plan”), the list of companies of “Baiterek” NMH” JSC (hereinafter referred to as the Holding) included companies subject to transfer to the competitive environment:

Company

Status

  • Housing Construction Savings Bank of Kazakhstan JSC

in process

  • 8 subsidiary enterprises of QazTech Ventures JSC:

 

    • “Algorithm” Technopark LLP in Oral

sold

    • “Sary-Arka” Technopark LLP in Qaragandy  

sold

    • Technopark of K.I.Satpayev KazNTU LLP in Almaty

sold

    • “Altai” East Kazakhstan Regional Technopark LLP in Oskemen

sold

    • Machinery Design Engineering Bureau LLP in Astana

dissolved

    • Oil and Gas Equipment Design Engineering Bureau LLP in Petropavl

dissolved

    • Mining and Metallurgical Equipment Design Engineering Bureau LLP in Oskemen

dissolved

    • Agricultural Machinery Design Engineering Bureau LLP in

dissolved

  • 7 subsidiary enterprises of the Investment Fund of Kazakhstan JSC:

 

    • A-KBK JSC

sold

    • Ural Metal Works and Galvanizing Plant JSC

bankrupt/ dissolved

    • Yertis Chemical and Metallurgical Plant JSC

sold

    • Myrzabek Altyn Tas Group JSC

sold

    • Rannila Kazakhstan JSC

sold

    • Pams Pipe JSC  

sold

    • White Fish Kazakhstan JSC

bankrupt/ dissolved

 

In total, 9 companies have been sold, 6 are under bankruptcy/dissolution and 1 company is in the process of privatization currently out of 16 companies to be transferred to the competitive environment.

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"House Construction Savings Bank of Kazakhstan" JSC

- the only bank in the country that has been successfully implementing the principles of housing construction savings system since 2003. The housing construction savings system (hereinafter referred to as HCS) is aimed at improving living conditions of the population through attracting funds from depositors to housing construction deposits and providing them with housing loans.

Housing Construction Savings Bank of Kazakhstan JSC (Bank) is the operator of “Nurly Zher” Housing Program. The Law “On Housing Construction Savings in the Republic of Kazakhstan” guarantees incentives for depositors with a state premium (the maximum amount is 20% of the deposit amount up to 200 MCI).

One of the Bank’s strategic goals is the increase in the share of participants in the HCS system to 17% of the economically active population by 2024, which constituted 14.1% by the end of 2018. Housing Construction Savings Bank of Kazakhstan JSC has 17 regional branches, 17 service centers, 5 service points and 97 consulting centers in all the regions of the country and major cities, more than 1 200 individual agents (consultants).

As of January 1, 2019, the number of housing construction savings contracts in force was 1 297 thousand contracts with savings of 624 billion tenge. Since 2003, the Bank has issued loans to 173 thousand clients in the amount of 1 144 billion tenge.

Credit ratings of Housing Construction Savings Bank of Kazakhstan JSC are the best among the banks of the Republic of Kazakhstan. Moody’s Investors Service ranks it as Baa3, and Fitch Ratings as BBB-.

Housing Construction Savings Bank is a member of two international organizations: the European Federation of Building Societies and the International Union for Housing Finance.

Since 2015, Housing Construction Savings Bank of Kazakhstan JSC has been cooperating with the largest construction savings bank in Germany, Bausparkasse Schwäbisch Hall, which has been operating on the European lending market for more than 80 years, successfully implementing the housing savings system.

House Construction Savings Bank of Kazakhstan JSC is a sustainable financial institution with the main task of ensuring equal access of the general population to the system of housing construction savings in all the regions of the country and providing quality banking services to improve housing conditions.

Link to the website: http://www.hcsbk.kz/

House Construction Savings Bank of Kazakhstan" JSC

House Construction Savings Bank of Kazakhstan" JSC

3. REGULATORY LEGAL ACTS

Link to the Resolution of the Government of the Republic of Kazakhstan No. 1141

The regulations for the transfer of assets of “Baiterek” National Managing Holding JSC and organizations with more than 50% of the voting shares (participatory shares in the authorized capital) directly or indirectly owned by “Baiterek” National Managing Holding JSC under the ownership right to the competitive environment.

 

4. DECLARATION OF RESPONSIBILITY

The information posted on the website of “Baiterek” NMH JSC is not periodic and refers exclusively to the activities of “Baiterek” NMH JSC. All the information and data available on the website and in its sections are for informational purposes only and are not a public offer, unless specified otherwise in specific materials.

Terms of the website use apply to all the users. The fact of visiting the website (use of the website resources and materials) by the user confirms acceptance of the terms of the website use to the full extent without any exceptions and limitations.

“Baiterek” NMH JSC reserves the limited right to change any information posted on the website, including information about the services provided by “Baiterek” NMH JSC, as well as these terms of the website use, at any time at its discretion without prior notice to the users.

The risk of adverse consequences as a result of the use of recommendations, opinions and statements on the website is fully borne by the user. “Baiterek” NMH JSC does not guarantee and does not confirm the accuracy and reliability of recommendations, opinions and statements on the website. “Baiterek” NMH JSC is not liable for any losses (direct or indirect) resulting from the use of information provided on the website, as well as for losses caused as a result of the use or inability to use the services provided by “Baiterek” NMH JSC, even in the cases if the user was warned by “Baiterek” NMH JSC on the possibility of such losses.

“Baiterek” NMH JSC provides users with the right to copy documents and materials published on the website solely for personal purposes, without granting the right to distribute them to third parties or for any other commercial use.

By copying any materials of the website, the user agrees to observe the copyright of the materials used and retain the relevant marks of the original, including the date of publication, if it is indicated on the website, as well as indicate the date of the link used in relation to the information being copied.

Links to products and services of third parties are provided on the website only for informational purposes and do not imply that “Baiterek” NMH JSC supports, controls or recommends them.

Links to any other information resources posted on the website shall be used at the user's own discretion. “Baiterek” NMH JSC provides links to other online resources solely for the convenience of users; however, “Baiterek” NMH JSC does not systematically monitor the content of such resources and does not bear any responsibility for the accuracy and relevance of information, data, opinions, tips or statements posted thereon.

Frequently Asked Questions

1. WHAT IS PRIVATIZATION?

Privatization is the sale of public property by the government to individuals, non-governmental legal entities under special procedures established by the Law of the Republic of Kazakhstan “On State-Owned Property”.

2. WHICH METHODS OF PROPERTY/ASSETS TRADING ARE PROVIDED?

According to the Regulations for the Transfer of assets of “Baiterek” NMH JSC and organizations with more than 50% of the voting shares (participatory shares in the authorized capital) directly or indirectly owned by “Baiterek” NMH JSC to the competitive environment, the following methods are used:

1) bidding (forms: auction, tender);

2) competition through the two-stage procedures;

3) direct targeted sale;

4) trading on the stock exchange.

3. HOW IS A TRADING THROUGH ELECTRONIC AUCTION CONDUCTED?

Electronic auction (hereinafter referred to as the auction) is a form of bidding on the web portal of the registry, in which participants publicly submit their bids. The auction is held by two methods of bidding: the price increase and the price reduction. During the auction, the starting price of the object of sale is equal to the initial price. The sale object shall be put up for an auction within price increase for the first time.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

4. HOW IS A SALE THROUGH A TENDER CONDUCTED?

Tender is a form of bidding in which participants submit their quotations, which are loaded into a closed electronic envelope on a dedicated registry web page. The tender shall be open. In exceptional cases affecting the public security, environmental protection, foreign economic situation of the Republic of Kazakhstan determined by the Government of the Republic of Kazakhstan, the tender may be closed.

Participation in a closed tender is undertaken by a limited number of participants determined by the seller or its committee. Invitations to participate in a closed tender with all the conditions of a closed tender shall be sent by the seller. Registration of applications of entities who have been invited to participate, willing to participate in a closed tender, shall be completed on the web portal of the registry from the date of sending the written invitations and ends two hours before the start of the closed tender.

A tender or a closed tender shall be carried out on the web portal of the registry, Tuesday to Friday, with the exception of holidays and weekends stipulated in the laws of the Republic of Kazakhstan. A tender or a closed tender shall be held from 10.00 AM to 1.00 PM, Astana time. When placing an object for the first tender (closed tender), the tender starting price of the object of sale shall be equal to the initial price, and shall be determined by the seller within the second and subsequent tenders.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

5. HOW IS A SALE THROUGH COMPETITION CONDUCTED?

Two-stage procedures competition is a method for the sale of an asset, in which the winner of the competition shall be determined by the seller involving participation of independent consultants.

An independent consultant shall be attracted through open bidding (auction, tender) to conduct a comprehensive analysis of the privatization object, assessment of its value and formation of its potential buyers for the information database on the objects of sales.

6. HOW IS A DIRECT TARGETED SALE CONDUCTED?

Direct targeted sale of an asset is conducted to a strategic investor, a Kazakhstani or foreign legal entity (its associations) that meets the following criteria:

- the investor’s and (or) its affiliates’ experience in the field related to the activities of the asset being sold;

- acquisition of a large stock of shares (participatory shares in the authorized capital) to participate in asset management, as well as development through technology transfer (if any), including obtaining undisclosed information (production secrets, know-how) and attracting highly qualified experts.

Note: the Regulations for the Transfer of assets of “Baiterek” National Managing Holding JSC and organizations with more than 50% of the voting shares (participatory shares in the authorized capital) directly or indirectly owned by “Baiterek” National Managing Holding JSC under the ownership right to the competitive environment.

7. HOW IS A TRADING ON THE STOCK EXCHANGE CONDUCTED?

Trading on the stock exchange is conducted in accordance with the Law of the Republic of Kazakhstan “On the Securities Market” and other regulatory legal acts.

Note: the Regulations for the Transfer of assets of “Baiterek” National Managing Holding JSC and organizations with more than 50% of the voting shares (participatory shares in the authorized capital) directly or indirectly owned by “Baiterek” National Managing Holding JSC under the ownership right to the competitive environment.

8. IS IT POSSIBLE TO PAY FOR THE ASSET BY INSTALLMENTS?

Payment by installments is accepted only in the cases where the conditions of a possible installment plan have been communicated to the bidders in advance. At the same time, the amount of the down payment may not be less than fifteen percent of the sale price, and the installment period shall not exceed three years.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

9. UNDER WHICH PRIVATIZATION METHODS SHALL THE SELLER SET A CONDITION FOR PRESERVING THE ACTIVITIES PROFILE?

The seller shall set a condition for preserving the activities profile when selling through a tender and by direct targeted sale.

10. WHICH DOCUMENTS ARE REQUIRED TO PARTICIPATE IN THE BIDDING?

It is required to get registered on the website of the registry to participate in the bidding indicating as follows:

1) for individuals: Personal Identification Number (PIN), last name, first name and patronymic (if any);

2) for legal entities: Business Identification Number (BIN), full title of a company, last name, first name and patronymic (if any) of the top executive officer;

3) second-tier bank account details for returning the guarantee fee;

4) contact details (postal address, telephone, fax, e-mail).

If the above-mentioned data is changed, the participant shall modify the data entered on the web portal of the registry within one business day.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

11. WHAT IS THE AMOUNT OF A GUARANTEE FEE?

A guarantee fee is the amount of funds worth 15% of the initial price of the object of sale contributed by an individual or legal entity to participate in the bidding, but shall not exceed 30 000-time monthly calculation indicator.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

12. WHAT IS THE DEADLINE FOR BIDS SUBMISSION?

The bidders shall be registered on the web portal of the registry from the date of publication of the notice on the web portal of the registry and ends two hours before the start of the bidding.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

13. IS IT POSSIBLE THAT A SINGLE PARTICIPANT BECOMES A WINNER OF THE BIDDING?

If the number of applications from the tender (closed tender) participants or competition participants received by the web portal of the registry, or admitted to the auction by the bidders committee, is less than two, or, if the number of the tender (closed tender) participants allowed by the seller is less than two, then the tender (closed tender) shall be declared as failed, with the exception for the third and subsequent auctions, within which the object of sale may be sold to a single participant.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

14. WHAT ARE THE TIMELINES FOR PAYMENTS AND SALE AND PURCHASE AGREEMENT EXECUTION WITH THE WINNER OF A BIDDING?

The Sale and Purchase Agreement shall be signed between the seller and the buyer indicating reference to the Minutes of Meeting on the results of the bidding as the basis for signing the Sale and Purchase Agreement.

The seller shall specify in the Sale and Purchase Agreement the condition that the buyer’s title to the object of sale shall emerge after full payment.

Settlement under the Sale and Purchase Agreement shall be made between the seller and the buyer, while the buyer executes the settlement as follows:

1) a down payment shall be made in the amount of not less than 15% of the sale price of the object no later than ten business days from the date of signing the Sale and Purchase Agreement. The down payment is a guarantee for the proper fulfillment of the buyer’s obligations under the Sale and Purchase Agreement. The guarantee fee is credited to the due down payment;

2) the remaining amount shall be made by agreement of the parties, but no later than thirty calendar days from the date of signing the Sale and Purchase Agreement.

All payments between the seller and the buyer shall be made by clearing to the seller’s bank account specified in the Sale and Purchase Agreement.

In case of delay in the final payment, it is allowed to terminate the Sale and Purchase Agreement unilaterally. Upon termination of the Sale and Purchase Agreement as a result of the delay in the final payment, the down payment shall not be refunded.

Note: the source of information is the “Regulations for Electronic Auctions for the Sale of Property on the Web Portal of the State-Owned Property Register”.

15. WILL THE PREFERENTIAL LENDING RATES OF HOUSING CONSTRUCTION SAVINGS BANK OF KAZAKHSTAN JSC BE PRESERVED IF INVESTOR APPEARS?

All the current preferential terms for lending rates will be preserved to full extent. Regardless of the ownership form, the Bank will continue its activities within the framework of the Law “On Housing Construction Savings in the Republic of Kazakhstan”. According to Article 3 Sub-Clause 5 of the Law, the amount of the interest rate for a housing loan may not exceed the interest rate for housing construction savings contributions by more than three percent per annum.

16. WILL HOUSING CONSTRUCTION SAVINGS BANK OF KAZAKHSTAN JSC CONTINUE ITS INVOLVEMENT IN THE PUBLIC HOUSING PROGRAMS GIVEN PRIVATIZATION?

Yes, indeed. Housing Construction Savings Bank of Kazakhstan JSC is the main operator of the country’s new housing program, "Nurly Zher". This public program combines all the housing initiatives of the government and the initial stage of its implementation is lasting during the period from 2017 to 2021.

17. IF THERE IS A NEW INVESTOR, WILL THE STATE PREMIUM FOR DEPOSITORS OF HOUSING CONSTRUCTION SAVINGS BANK OF KAZAKHSTAN JSC BE CANCELED?

It will not be cancelled, since the payment of the state premium in the amount of 20% of the annual savings on the citizens' deposits is regulated by the Law “On Housing Construction Savings in the Republic of Kazakhstan”. All premium payments are made from the state budget.