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Air Astana IPO sees strong demand and EBRD piles in for 5% of stock


Kazakhstan’s Air Astana [LON:AIRA] hit the London market this week with an IPO that marks the largest privatisation of a Kazakhstan company to date. The total deal size across two regional markets in Central Asia plus the London Stock Exchange valued the airline at USD 847m.

Local investors in Kazakhstan piled into the offering, accounting for 53% of total shares. International investors were given 25% of the total offering. Over 97% of retail investors applying for shares were allocated in full.

There were some heavy hitters entering the stock as part of the IPO. This includes the European Bank for Reconstruction and Development, which took 5% of the available stake. Reducing their holdings were, among others, Kazakhstan’s sovereign wealth fund, as well as the BAE Systems LON:BA. subsidiary in Kazakstan, although both entities remain as shareholders.

Shares in Air Astana were up 1.98% immediately following the IPO and the stock price will be closely watched in weeks to come.

Big retail demand in Asia for Air Astana shares

“This IPO has been carefully constructed to ensure Kazakh investors receive the majority of the offering while also raising capital from the international markets,” explained Air Astana’s CEO, Peter Foster. “We are delighted to have achieved this following exceptionally strong levels of demand from both institutions and retail investors. Such has been the level of interest that the IPO was multiple times oversubscribed despite upsizing the offering to meet demand.”

Air Astana is regarded as the leading airline in the Central Asian market, both in terms of revenues and fleet size. It operates a fleet of 50 aircraft split between Air Astana, its full-service airline that operated its inaugural flight in 2002, and FlyArystan, its low-cost airline established in 2019.

Air Astana is a big player in the Central Asia airline game

Air Astana provides scheduled, point-to-point and transit, short-haul and long-haul air travel and cargo on domestic, regional and international routes across Central Asia, the Caucasus, the Far East, the Middle East, India and Europe. In the year ended 31 December 2022, the group carried approximately 7.3 million passengers on approximately 52 thousand flights across 16 countries.

Air Astana successfully recovered at a faster rate post-COVID in comparison to global averages and generated a CAGR in revenue of 60.6% for the three years ended 31 December 2022.

The listing was an important one for the London market, which has seen a dearth of listings in the last 18 months. Sources within the corporate finance sector close to The Armchair Trader ascribe this to high levels of expense and inefficiency in the London market. The Air Astana IPO, however, has been successfully carried out thanks to the enthusiastic uptake in shares by local investors in Kazakhstan, plus the involvement of some larger strategic investors.

Despite Russia’s invasion of Ukraine, Central Asia represents a growing and lucrative market for airlines which can cover it. We have already seen how Turkish Airlines has benefited from its regional access, both during and after the pandemic. Kazakhstan sits at a critical nexus point for air traffic between Russia, the Middle East and East Asia and its airlines have been enjoying an uptick in demand as international sanctions have clamped down on direct traffic between Russia and Europe.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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