One guy makes a solar charging all weather coat; another builds the country’s best app.
The latter became London’s second biggest IPO this month and it came from a company no one has heard of, unless they live in Russia or Kazakhstan. The fintech firm Kaspi.kz saw its shares rise 26% when it listed on the London Stock Exchange on October 15. Kaspi priced its initial public offering at $33.75, securing an overall valuation of $6.5 billion. The stock is now trading over $41.70.
Kaspi.kz is controlled by Kaspi bank, the third largest bank in Kazakhstan. It runs the country’s largest e-commerce platform. The story is all about the unbanked, and easy banking, in a country known more for gas and minerals. Yet, this Epcot-like financial center, now about four years old, is becoming a breeding ground to fintech companies in Central Asia. Welcome to the 21st century. In a way, Kazakhstan is going from 1950 to 2020 in two decades. Its signature highlight in all this transformation is clearly the Astana International Finance Center, which for some is like a country within a country (it has a separate jurisdiction based on the English law when it comes to business and securities, all recognized by Kazakhstan’s constitution).
Kaspi shares are also listed on the Astana International Exchange, or AIX. It’s now Kazakhstan’s most valuable company with listed shares. AIX was launched in 2017 within the AIFC properties. AIX shareholders include the AIFC, Goldman Sachs
That blockbuster IPO “opens the way for other Kazakh issuers in the tech space,” says Renat Bekturov, AIX’s CFO.
AIFC, which I’ve written about since it was birthed out of the World Fair held in Kazakhstan in 2017, is showing that it is really living up to its promises. They have a fintech hub for startups on site. Some of these guys are winning awards in international competitions. We don’t know which of these are the next to IPO, but here are some names that got their feet wet inside the AIFCs fintech accelerator.
ULES: they provide a platform for lenders and borrowers to negotiate, with the idea that borrowers can get better terms than in traditional lending environments.
ELIZE Invest Solutions: they say they have an algorithm that helps businesses increase revenues, streamline investment portfolios and reduce operational expenses.
SENIM: developed and launched an application that allows people to pay for services remotely, sort of like we have here with city parking spaces. Apparently, you can pay for gasoline, and buy movie tickets, too, to name a few options they say they have.
Panda Money: developed a financial literacy education program for children with an option to save money, think Acorn or Robinhood.
Also in the fintech accelerator is a company called Sunorak. They’re making a jacket that is able to charge mobile phones via solar cells. Last year, it won first prize at the national finals of the Entrepreneurship World Cup competition held in Almaty, Kazakhstan’s first capital and its business center.
A company called QuickCash works with small business to process a credit application on its site in just five minutes. Smart Pay is another one there. They have a payments solution for small and medium sized businesses and have been in the market now for over four years. They have over 10,000 companies in Kazakhstan using them.
The development and maturity of the fintech startup ecosystem within Central Asian countries are mostly all early stage when comparing to already established markets like the U.S., China, Europe and Israel.
“Kaspi.kz wasn’t a startup, but it’s a good example of transformation of traditional bank to fintech company. But the case shows tremendous opportunities for fintech startups given the high mobile phone and internet access levels, growing digital adoption rate and relatively large unbanked population in the region.” says Kairat Kaliyev, Chief Development Officer at AIFC, responsible for fintech development.
According to Startup Genome, an innovation policy advisory and research firm with offices in San Francisco, Berlin and Delhi, Nur-Sultan ranks high in terms of fast-growing startup ecosystems in the developing world and is fifth overall for affordable talent.
During the last two years, AIFC Fintech Hub’s accelerator programs supported more than 120 startups. Currently, 26 firms from 11 states were accepted to the Fintech Lab, focused on different types of financial services such as payments, mobile banking, digital assets, crowdfunding and other solutions.
Kaspi.kz says it plans on expanding beyond the territory of Kazakhstan. It has a 7.8 million users on its Super App, which Kazakhs generally refer to as the “Kaspi app”. They face barely any competition. They’re quickly turning into Kazakhstan’s de facto payment system, with both retailers and consumers preferring to use transfers via the app as an alternative to cash.
The Kaspi story is the best example yet of the natural resources-based, old-school economy of Kazakhstan diversifying towards a post-industrial, new tech economy. And AIFC, which was designed for companies like this, may be finally coming into its own in a region of the frontier world still seen by investors as nothing by a speculative bond market that sells oil and gas.
For Kazakhstan, those days are coming to a close as its new era begins.