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Kazakhstan’s national carrier Air Astana has announced plans to float in London, as the carrier seeks to turbocharge its growth.
The airline, which is almost 50 per cent owned by defence company BAE Systems, hopes to list in both Kazakhstan and on the London Stock Exchange, offering the latter a boost after a year in which it has struggled to attract new companies.
Air Astana said on Friday it hoped to raise $120mn through twin listings on the London Stock Exchange and in Kazakhstan. The proposed flotation also marks a potential windfall for BAE Systems, which owns 49 per cent of the carrier. The rest is owned by the Kazakh sovereign wealth fund. Air Astana did not disclose how much of the company it intended to sell in the IPO.
The London stock market has suffered a string of disappointments over the past year as companies moved their listings or chose to float elsewhere.
Recent snubs have included Europe’s largest tour operator Tui, whose board last week recommended to shareholders that it cancel its UK listing, while UK commodities broker and clearer Marex plans to float in New York.
Peter Foster, Air Astana’s chief executive, said “there was never any doubt” the airline would choose London for its listing, however.
He said the company was attracted by London’s strong corporate governance framework and liquidity, as well as BAE’s ties to London.
“We always knew this was going to be a dual listing, Kazakhstan and a major global market, and there was never any doubt that was going to be London,” he said.
BAE’s shareholding dates back to the launch of Air Astana in 2002. The UK company was bidding for a defence contract at the time and was asked to invest start-up capital of $8.5mn towards the launch.
The defence deal never happened, but Sir Richard Evans, then chair of BAE Systems, went on to become chair of Samruk, Kazakhstan’s sovereign wealth fund, after leaving the defence group in 2004.
Although BAE’s operations are today focused on defence, the company used to have interests in civil aviation. It sold a 20 per cent stake in Airbus, the European plane maker, in 2006.
BAE said: “Air Astana is a thriving, well-managed business. We’re supporting the group’s plans to explore a potential initial public offering as part of the investment strategy to accelerate its next growth phase and support the airline’s continued long-term success.”
Air Astana, which carried 6mn passengers in the first nine months of the year, operates a fleet of 49 aircraft.
The company flies a full-service airline as well as a low-cost operation called FlyArystan, which between them fly to a string of major international destinations including London, Amsterdam and Beijing.
Aviation industry executives see central Asia as a potentially lucrative new market, as economic growth expands the numbers of people who can afford to fly.
Despite recent growth, Air Astana said it believed the market in Kazakhstan “continues to be underserved”.
“It is no longer the virgin territory that it was when we started all those years ago . . . but notwithstanding that we really are only at the beginning of the growth of these markets,” Foster said.
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