roundtable discussion: capital market development programme
TRANSCRIPT
Roundtable discussion: Capital market development programme
IPO/SPO 2022-2023 plan
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IPO/SPO plans for 2022-2023
STATE SHARE
INDUSTRY
100% Automobile
manufacturing
98.6%
85%
Metals and
mining
Metals and mining
100%
96.5%
Banking
Banking
25%
76%
Insurance
Oil and Gas
STATE SHARE
INDUSTRY
94.3%
94.6%
Banking
Insurance
88.3%
84.8%
Metals and
mining
Banking
49%
Air
transportation
100%
75.5%
Banking
Oil and Gas
ALMALYK MMC
UZMETKOMBINAT JSC
2022
Q1
Q2
Q3
Q4
NAVOI MMC
2023
Q1
Q2
Q3
TBD
First local listings, then international listings.
Pre-IPO and IPO preparation in local listings will be based on international standards.
Underwriter syndicate will be a consortium of one international, one regional and one local financial company (license holder).
IPO/SPO size and timing is subject to underwriters` recommendations alongside with market conditions and government approvals.
No any legal/technical restrictions for foreign investors to purchase locally issued shares.
4
pre-IPO preparation
IPO preparation
IPO execution
• Approval of Supervisory Board (SB)/General Meeting of Shareholders (GMS) on IPO
• Appointment of advisors (underwriters, lawyers and others) via official tender
• IPO readiness analysis: - Business plan and strategy - Financials/accounting/disclosure - Capital structure/dividend policy - Corporate structure/governance
• Early look meetings with investors and initial assessment of demand
• Prepare and finalise: - Financial statements - Business plan and strategy - Offering prospectus and other legal documents - investor presentation
• Develop: - equity story - research report for investors - marketing strategy
• Preliminary valuation
• Finalise offer structure
• Approval of Supervisory Board (SB)/General Meeting of Shareholders (GMS) on final prospectus and legal docs, offer structure and price range, and marketing strategy
• Registration by Capital Market Authority (5 to 15 working days) • Registration by Central Securities Depository (1 to 5 working days) • Publication of research • Publication of prospectus • Signals of public “launch” of IPO • Investor feedback and initial valuation thoughts • Analyse feedback and monitor market • Refine and set valuation range • Roadshow • Analyse demand/feedback • Pricing and allocation • Clearing (T+2)
Local IPO process
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Investor
👨
Resident: Individual / legal entity
Non-resident: Individual / legal entity
👨
Account opening procedure: • Submission of documents
• Signing a contract
• Client's deposit account
• Topping-up account
Investment intermediary
Registration of the
application
Entering an application in Single Software Technical
Complex (SSTC)
Collection of applications
Accomplish the final stage of the subscription
Broker
if the application is successful
if the application is unsuccessful
Clearing
Implementation of settlements
Withdrawal of
commissions and fees
Investor/Shareholder
Acquisition of ownership rights to securities
Depositor (905 772)
Resident (902 200)
Non-residents (3,572)
Individuals (837 293)
Legal entities (64,907)
Individuals (3,067)
Legal entities (505)
Opening depo accounts by foreign investors
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Best offer selection Tender
Bid announcement bid evaluation criteria
technical task
Tender announcement tender evaluation criteria
technical task
At least five days before the selection
12-30 days
Technical tasks of the procurements above the
25000 BCV
Technical tasks of the procurements above
25000 BCV
Made automatically by the platform/commission
using score method
Made automatically by the platform/commission
using scoring method
Dealed/rejected Dealed/rejected
Procurement announcements:
Development of procurement documentations:
Examination at the Center for Comprehensive Expertise of Projects and Import Contracts:
Offer evaluations:
Dealing with the winner:
Procurement procedures for each type
*BCV-Basic calculated value
Public procurement process
The procurement process of enterprises with government share of 50 percent or more is regulated by the laws and the legislations of the Republic of Uzbekistan.
A procurement selection procedure is led by commission consisting of at least five members of the procuring company.
Tender documentation for public procurement in an amount exceeding twenty-five thousand minimum wages is subject to examination at the Center for Comprehensive Expertise of Projects and Import Contracts
Procurement of goods (work, services), are carried out under direct contracts on the basis of decrees and resolutions of the President of the Republic of Uzbekistan, resolutions of the Cabinet of Ministers of the Republic of Uzbekistan.
Developments in IT infrastructure
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Completed projects
The extension of current contracts with vendors for servicing the unified software complex;
Seminar-trainings for the unified software complex’s staff on maintenance of the system;
Approval has been obtained to create disaster recovery and Business Continuity Plan facilities:
construction of permanent Reserve centre in Yunusabad;
purchasing server as a reserve for the short-term;
renovation of the current building.
Implementation of daily publishing of all market activity.
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Description Status Deadline
Development of an API for interaction between applications and programs to provide access to the unified software complex through mobile applications.
In progress Q1 2022
MOU with KRX that incorporates advanced trainings on unified software complex operations: - increase of the technical capabilities and capacity of the complex, - technological changes of software for the sale of new financial instruments
(mortgage securities, Sukuk, investment funds and etc.) - Surveillance function for the regulator.
In progress Q1 2022
Development of a Central portal as a workflow tool for the capital market: - Disclosure of information by JSCs; - Registration automation, Licensing and Attestation, Learning and development; - Review cases by the regulator.
In progress Q1 2022
National numbering agency function implementation by the CSD Being implemented Q3 2022
Electronic identification (KYC) of residents (individuals) Being implemented Q2 2022
Stock exchange and the currency exchange integration to allow for international investors to trade with government bonds
Being reviewed Q1 2022
Creating an OTC platform for RSE Being reviewed Q3 2022
Ongoing projects
Developments in legal infrastructure
Reform of CM legal infrastructure: summary
Quick enhancements: ongoing changes
Strategic/policy directions:
Capital Markets Law
IOSCO MMoU signing
Collective Investment Schemes, ETFs, Futures, etc
Islamic Finance
Securitization, mortgage market development
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Description Status Deadline
- Changes related to the online format of shareholder meetings, placement of preferred stocks, - Automatic recognition of the public placement through organized market, - Introducing exchange traded bonds with simplified placement conditions, - Notion of foreign nominal holding introduced, - Investment advisor enabled to provide transfer agent services and more
Completed
- Account opening procedures Electronic authentication and identification process (KYC and FATF for residents Simplified identification for foreign investors
Draft Q1 2022
Reviewing attractiveness of stocks and bonds vs retail banking products, tax amounts review Draft Q4 2021
Allowing nonresidents access to purchase local Government bonds and creation of secondary market for them
Draft Q4 2021
Privatization of State owned enterprises – using the local capital market in the privatization process Draft Q4 2021
Simplification of underwriter consortium forming with foreign banks and financial services institutions Draft Q4 2021
Corporate actions and improvements of dividend payment procedure Draft Q1 2022
Simplifying rules around trading, making everything electronic (documentation) Draft Q1 2022
Draft regulation for issuance of local currency bonds by the international financial institutions has been prepared and in review
Draft Q1 2022
Developing corporate bond market, including possible remove of collateral requirements Being reviewed Q1 2022
Review disclosing requirements/rules – including of Board’s recommendations, cash flows. Simplification of reporting forms
Being reviewed Q1 2022
Procedure improvements
Capital Markets Development Strategy, Technical Assistance
European Bank for Reconstruction and Development EBRD
Capital Markets Roadmap, Technical Assistance
Asian Development Bank ADB
Signing MMoU, diagnosing and streamlining legal framework
IOSCO/IMF
To issue Bonds on behalf of World Bank and Uzbekistan
International Finance Corporation IFC (World Bank Group)
International Co-operation In delivering the reform of the capital market legal infrastructure, the Ministry of Finance is actively working in partnership with international organizations and institutions
Developing capital markets law
US Government (Department of Commerce, US Treasury, SEC)
Developing legal framework for Islamic finance products
Islamic Development Bank IsDB/UNDP
Green Sukuk Initiative, SDGs
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Description Int. Partner Status
Capital Markets Law US Gov., EBRD Drafting
IOSCO MMoU signing IMF/IOSCO/EBRD In progress
Collective Investment Schemes, ETFs, Futures, etc.
ADB/EBRD Drafting
Islamic Finance IsDB/UNDP Drafting
Securitization, mortgage market development ADB/EBRD Drafting
Strategic/policy directions
Capital Markets Law
Draft capital market law in works with support of EBRD and US Government. Law shall comply with best international standards, including IOSCO principles of regulation;
The draft shall overarch major capital markets areas such as:
Defining the regulatory perimeter (regulatory structure and competencies of the regulator);
Professional participants of the market;
Marketplace (categories) and its regulation;
Diversification of the products;
CIS (investment funds), Securitization, Islamic Finance, SROs, credit rating agencies;
Disclosure, surveillance and enforcement.
IOSCO Memorandum (MMoU)
Uzbekistan has committed to sign IOSCO MMoU;
Diagnostic report was produced with the support of the IMF;
Respective areas have been identified and changes to the legislation will be reflected primarily in the new capital markets law as well as ongoing changes to the securities legislation;
Discussions and preparations of screening of the post-amended legislation are underway.
Other financial products
With support of ADB, the work on collective investment schemes and related products has commenced;
The project envisages two directions: elaboration of the law on collective investment schemes (investment funds) and development of the products tailored to the local market. This includes ETFs and gold ETFs;
The preliminary draft law on collective investments schemes is in works and under review to provide basis for further iterations based on the feedback of the Ministry.
Islamic finance
With support of Islamic Development Bank and UNDP, elaboration of the legal framework to enable Islamic finance products is underway;
Tender has been announced and local and international law firms have been retained to provide expertise and prepare respective draft legislation;
Feasibility and preliminary studies have been delivered. Ministry is currently reviewing the memo on the sukuk and is in regular discussions with the local and international firm to guide their work.
Securitization, mortgage refinance
Capital market reform envisages introduction of the ABS/MBS structures to lift the liquidity pressures from the financial market;
Capital markets law will cover the legal concepts required for implementation of such products ultimately leading to the development of fully fledged legislation related to asset backed securities;
Meanwhile, the MOF is overseeing development of legal framework for Zakladnayas to enable safe refinancing of the mortgage loan portfolios of local commercial banks by Uzbekistan Mortgage Refinancing Company.
Thank You!