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REG - JSC Kaspi.kz - Confirmation of Intention to Float on the LSE




 



RNS Number : 9307A
JSC Kaspi.kz
02 October 2020
 

**NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL**

 

Neither this announcement, nor anything contained herein, nor anything contained in the Registration Document referred to herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Investors should not subscribe for or purchase any securities referred to in this announcement or the Registration Document except on the basis of information contained in a prospectus in its final form (the "Prospectus") that may be published by Joint Stock Company Kaspi.kz (the "Company", and together with its subsidiaries and subsidiary undertakings, the "Group" or "Kaspi.kz") in due course in connection with the possible admission of global depositary receipts to the standard listing segment of the Official List of the Financial Conduct Authority of the United Kingdom (the "FCA") and to trading on London Stock Exchange plc's (the "London Stock Exchange") main market for listed securities. A copy of any Prospectus published by the Company will, if published, be available for inspection on the Company's website at www.ir.kaspi.kz, subject to certain access restrictions.

2 October 2020

JOINT STOCK COMPANY KASPI.KZ

CONFIRMATION OF INTENTION TO FLOAT

ON THE LONDON STOCK EXCHANGE

Following the announcement by Kaspi.kz on 25 September 2020 regarding the publication of a Registration Document, Kapsi.kz confirms its intention to proceed with an initial public offering (the "IPO" or the "Offering") and certain details of the Offering. The Company intends to apply for admission of global depositary receipts ("GDRs") representing its common shares ("Shares") to the standard listing segment of the Official List of the FCA and to trading on the London Stock Exchange's main market for listed securities (together, "Admission"). Admission is currently expected to occur in October 2020.  

Commenting on today's announcement, Mikheil Lomtadze, Chairman of the Management Board and co-founder of Kaspi.kz, said:

"I am delighted to confirm our intention to float Kaspi.kz on the London Stock Exchange.  Kaspi.kz is a success story which has been built over the last decade, with the Company developing market-leading Payments, Marketplace and Fintech Platforms in Kazakhstan. At the core of our success is the Kaspi.kz Super App, which is the leading mobile app in the country with 7.8 million monthly active users.

Highly integrated services, which are available through a single Super App, create a seamless customer experience, strong network effects, and make us integral to the lives of our users.  The result is a powerful business model with leading market shares in all of our key products and services, and fast and highly profitable growth.

In the midst of the COVID-19 pandemic, our Super App has become more important and essential than ever. As people's daily lives become increasingly digitalised we expect the relevance of Kaspi.kz's Ecosystem to the unfolding digital future to only increase, leaving us extremely well positioned to deliver further rapid growth and create value for all of our shareholders."

 

Confirmation of Offering structure:

·   The Offering will consist of a sale of existing Shares in the form of GDRs by current shareholders of the Company (the "Selling Shareholders"), with each GDR representing an interest in one Share.  Concurrently with, and separately from, the Offering, at least 20% of the maximum number of GDRs offered for sale by the Selling Shareholders in connection with the Offering will be offered for sale through the Astana International Exchange. The Shares are also listed on Kazakhstan Stock Exchange JSC.

 

·    The Selling Shareholders comprise (i) Asia Equity Partners Limited and Baring Vostok Nexus Limited (owned by funds advised by Baring Vostok Capital Partners); (ii) ELQ Lux Holding S.à.r.l. (a wholly owned subsidiary of the Goldman Sachs Group); (iii) Vyacheslav Kim; (iv) Mikheil Lomtadze; and (v) certain members of the Company's founding management team. Each of the Selling Shareholders intends to retain an interest in the Company post-IPO.

 

·    The Offer will comprise of an offer of GDRs to institutional investors in qualifying jurisdictions (in the UK and elsewhere outside the United States in reliance on Regulation S and in accordance with locally applicable laws and regulations, and in the United States, only to qualified institutional buyers as defined in and pursuant to Rule 144A under the US Securities Act of 1933, as amended (the "Securities Act"), or another exemption from, or transaction not subject to, the registration requirements of the Securities Act).

 

·    Certain Selling Shareholders intend to grant an over-allotment option for up to a maximum of 15% of the total number of GDRs being sold in the Offering.

 

·     Any additional details in relation to the Offering will be disclosed in the Prospectus.

 

·   Morgan Stanley & Co International plc and Citigroup Global Markets Limited are acting as Joint Global Coordinators in connection with the Offering and, along with Renaissance Capital, as Joint Bookrunners.

 

About Kaspi.kz

Kaspi.kz is the largest Payments, Marketplace and Fintech Ecosystem in Kazakhstan with a leading market share in each of its key services and products. At the core of the Kaspi.kz Ecosystem is the Kaspi.kz Super App, the leading mobile app in the country with 7.8 million Monthly Active Users ("MAU").

The Kaspi.kz Super App serves as a single gateway to all of the Company's services and is an integral part of people's daily lives in Kazakhstan. As people's daily lives become increasingly digitalised the Company expects the usage of its Super App to grow, with the COVID-19 pandemic accelerating consumer adoption of cashless payments, e-Commerce and digital financial services.

The Company's Ecosystem business model, where the growth and development of one service contributes to the growth and development of other services, creates a powerful virtuous cycle.  A growing number of services being used by the Company's consumers results in synergies across all of its Platforms, structurally high profitability and creates a powerful self-reinforcing network effect, giving the Company strong competitive advantages. 

The Kaspi.kz Ecosystem currently comprises the following three market leading Platforms:

·   Payments Platform connects the Company's customers, which consist of both consumers and merchants, to facilitate cashless, digital payment transactions. The Company offers its customers a technology platform to both pay and receive payments for goods and services, as well as to transfer and withdraw money.  Consumers can transact with merchants and amongst themselves using a variety of services, including the Kaspi.kz Super App, a Kaspi Gold pre-paid debit card and/or any bank card or e-Wallet.

     In June 2020, the Company's proprietary payment network transactions accounted for 66% of total payment network transactions in Kazakhstan, while other payment networks, including Visa and Mastercard, had an aggregate share of 34% of the total payment network transactions in the country.[1]

·  Marketplace Platform connects merchants and consumers, enabling merchants to increase their sales and enabling consumers to buy a broad selection of products and services from a variety of online and offline merchants.  The Company helps merchants increase their sales by linking them to its technology, payment options, including buy-now-pay-later consumer finance products, fulfilment, marketing and branding services.

   Kaspi.kz was the largest online retailer in Kazakhstan by sales value in 2019, with an e-Commerce gross merchandise value ("GMV")[2] share corresponding to 46%[3] of the market.  The Marketplace Platform's total GMV had a value share of total Kazakhstan retail trade of 5.5%[4] in 2019.

·   Fintech Platform enables consumers to access, primarily through Kaspi.kz Super App, the Company's digital finance products, including consumer finance and deposits. Kaspi.kz's buy-now-pay-later consumer finance products are also strategically integrated with its Marketplace Platform, which means that consumers are able to make a purchase seamlessly with financing and then pay over time in monthly instalments.

      In 2019 the Company enjoyed the largest market share of Consumer Loans in Kazakhstan, amounting to 32%.[5]

Dividend policy

The Company's business model is highly profitable and cash generative.  The Company has a track record of returning more than 50% of its annual net income to shareholders either via dividends or buybacks and going forward intends to pay dividends annually of at least 50% of net income, calculated under IFRS.

H1 2020 Key Results Highlights

Consolidated Performance

·    In June 2020, the number of MAU of Kaspi.kz's Super App increased by 72% to 7.8 million from 4.5 million in June 2019, adding 3.3 million MAU. 

·   The number of monthly transactions per Active Consumer[6] in the first half of 2020 amounted to 19.3, almost doubling from 10.0 monthly transactions per Active Consumer in the first half of 2019.  In June 2020, 90% of transactions took place through Kaspi.kz's Super App. 

·   In the first half of 2020, the Company generated total revenue of KZT299,096 million (U.S.$741 million), representing year-on-year growth of 31.8% from KZT226,862 million in the first half of 2019, and net income of KZT115,579 million (U.S.$286 million), representing year-on-year growth of 50.1% from KZT77,001.

 

·    Over the last three years the Company has made significant progress in diversifying its net income and, in the first half of 2020, the Payments and Marketplace Platforms accounted for 30% of total net income.  This is a material increase from 20% in 2018, and the Company remains on track to achieve its strategic goal of delivering the majority of net income from these rapidly growing and highly profitable segments over the mid-term. 

Payments Platform

·    In the first half of 2020, the Company's Total Payment Value ("TPV")[7] increased by 185.8% year-on-year and reached KZT8,178,998 million (U.S.$20,253 million) while its Revenue-generating Total Payment Volume ("RTPV")[8] increased by 79.9% year-on-year and reached KZT2,407,832 million (U.S.$5,962 million).

·   The Payments Platform generated total revenue of KZT48,594 million (U.S.$120 million), representing an increase of 91.8% from KZT25,330 million in the first half of 2019, and net income of KZT23,885 million (U.S.$59 million), representing a growth of 160.8% year-on-year. In the Payments Platform, the Company has experienced continued TPV and RTPV growth against the backdrop of an increasing adoption of digital contactless payment methods by consumers. TPV demonstrated year-on-year growth of 194% in August 2020 compared to August 2019, with RTPV demonstrating 91% year-on-year growth in the same period.

·   In the Payments Platform, the Company has experienced continued TPV and RTPV growth against the backdrop of an increasing adoption of digital contactless payment methods by consumers.  TPV demonstrated year-on-year growth of 194% in August 2020 compared to August 2019, with RTPV demonstrating 91% year-on-year growth in the same period.  TPV year-on-year growth was 187% in first 8 months of 2020 compared to 8 months 2019, with RTPV demonstrating 80% year-on-year growth in the same period.

Marketplace Platform

·   In the first half of 2020, the Company's GMV increased by 12.1% year-on-year and reached KZT271,092 million (U.S.$671 million). In contrast, e-Commerce GMV increased by 76.9% year-on-year to KZT113,501 million (U.S.$281 million), despite total retail trade in Kazakhstan reducing by 7% over the same period (due to restrictions imposed in light of the COVID-19 pandemic).[9]

·   The Marketplace Platform generated total revenue of KZT19,151 million (U.S.$47 million), representing an increase of 21.5% from KZT15,761 million in the first half of 2019, and net income of KZT10,213 million (U.S.$25 million), representing a 5.6% increase year-on-year.

·    In the Marketplace Platform, the Company has experienced accelerated growth in e-Commerce GMV, driven by an increased adoption of online shopping from consumers and the scaling of Kaspi.kz's fulfillment capabilities. E-Commerce GMV demonstrated year-on-year growth of 259% in August 2020 compared to August 2019. For the first 8 months of 2020 e-Commerce GMV growth accelerated to 124% year-on-year compared to the first 8 months of 2019.

Fintech Platform

·   In the first half of 2020, Total Finance Volume ("TFV")[10] decreased by 19.8% and reached KZT693,706 million (U.S.$1.7 billion) from KZT865,014 million in the first half of 2019. 

·    The Fintech Platform generated total revenue of KZT231,351 million (U.S.$573 million), representing year-on-year growth of 25% from KZT185,771 million in the first half of 2019, and net income of KZT81,481 million (U.S.$202 million), representing year-on-year growth of 40% from KZT58,173.

Kaspi.kz's Competitive Strengths

The Company believes that the following competitive strengths have contributed, and will continue to contribute, to its long-term success:

Kaspi.kz Super App is Kazakhstan's Leading Mobile App

At the core of the Company's Ecosystem is the Kaspi.kz Super App, one of the most popular mobile apps in Kazakhstan, reaching 7.8 million MAU in June 2020, representing a 72% increase from 4.5 million MAU in June 2019.  The level of user engagement within the Kaspi.kz Super App is comparable to the levels of user engagement demonstrated by the world's most popular mobile apps such as, among others, Alipay, Facebook and WhatsApp.[11] This is further demonstrated by the increase in the Company's Average DAU to MAU ratio[12] to 51% in August 2020, compared to 34% in 2019.

High user satisfaction is demonstrated by a strong Net Promoter Score[13] of 87.3 (based on rolling 12 months average as of the first half of 2020), compared to the e-Commerce industry average of 40.0[14] for the same period. 

Integrated Ecosystem with Powerful Self-reinforcing Network Effects

The Company believes that its Ecosystem's diverse and complementary array of services results in powerful and sustainable self-reinforcing network effects, as the growth and development of one service directly contributes to the growth and evolution of other services. Strong network effects help the Company maintain leading market shares and results in both synergies across all the Company's Platforms and significant operating leverage.

For example, the large number of Active Consumers and the diverse range of convenient payment and financing options leads to increased consumer spending on the Marketplace. Higher spending on the Marketplace Platform in turn increases the number and volume of transactions through the Payments Platform, as well as financing through the Fintech Platform.  In addition, the Company believes its highly engaged consumer base attracts more merchants to the Marketplace, thereby increasing the product selection and competitive pricing, which in turn leads to growth in the number of consumers joining the Platforms.  

High-quality products and services around consumers' everyday needs integrated into a single Kaspi.kz Super App contribute to a higher number of products and services being used by Active Consumers.  This makes the Platforms increasingly attractive, with few reasons for the Company's consumers to switch to competing products and services. The retention rate of Active Consumers in the first half of 2020 was 98.2%. High retention of Active Consumers reduces consumer acquisition costs, drives operating leverage and results in structurally high profitability. 

All the Platforms have market leading shares and whilst the Company has a number of competitors in each of its segments, no single competitor offers the range of products and services that the Company is able to offer through a single Super App.

Significant Volumes of Proprietary Data Drive Product Development and Risk Management

The Company's Active Consumers make, on average, approximately 19 transactions per month.  Transaction data covers all aspects of consumer spending habits and is combined with social, financial and behavioural digital data gathered from mobile app usage.  Such high levels of transactions per consumer, combined with the leading market share of the Platforms, provides the Company with unmatched volumes of proprietary data and unique consumer insights.

The Company leverages its proprietary data to both personalise and enhance its consumer experiences, ensure best-in-class product development and more effective credit and transactional risk management procedures.  As a result, such additional data insights have allowed the Company to constantly grow its business and improve its cost of risk.

Leading Brand

The "Kaspi" brand is among the most recognisable and popular brands in Kazakhstan across all of the Company's Platforms. 

Based on the results of a survey held by TNS Gallup (on rolling basis for the 12 months ended 31 March 2020), the Company was the number one consumer choice across all of its products: (i) in payments, with 74.3% of respondents intending to pay online through Kaspi.kz in the next three months, compared to 15.9% for the nearest competitor; (ii) in e-Commerce, with 35.7% of respondents intending to buy electronics through Kaspi.kz in the next three months, compared to 19.8% for the nearest competitor; (iii) in consumer finance, with 51.6% of respondents intending to take a consumer loan from Kaspi.kz, compared to 12.6% for the nearest competitor; (iv) in deposits, with 53.0% of respondents intending to place a deposit with Kaspi.kz, compared to 16.6% for the nearest competitor; and (v) in card payments, with 76.3% of respondents intending to use a Kaspi Gold card for in-store and online shopping, compared to 11.7% for the nearest competitor.

Long-Standing Team and Unique Corporate Culture

The Company is led by an entrepreneurial management team with a proven track record of driving innovation.  The key members of the management team have each been with Kaspi.kz for more than 10 years. 

The Company believes that even large organisations need to stay innovative and therefore it fosters an environment that inspires teamwork, constant improvement and a relentless focus on delivering the best possible experience to its customers.

Kaspi.kz's Growth Strategy

The Company's strategy is to continue growing the number of consumers, merchants and transactions on its Platforms by constantly expanding the range of services and products available through the Kaspi.kz Super App. 

The key elements of the Company's strategy are as follows:

Take Advantage of Underpenetrated Markets with High Growth Potential

Mobile digital payments, shopping and financial services are experiencing structural growth globally, with Kazakhstan in the relatively early stages of this transition. 

Payments

Digital payments in Kazakhstan accounted for 31.0% of all consumer payment transactions in 2019, as compared to 81.6% in China, 76.8% in Turkey, 70.4% in Brazil and 51.4% in Russia.[15]

Marketplace

The Company believes that low penetration of online retail sales in Kazakhstan, which accounted for 3.4% of the total retail market in 2019 and which is, according to Euromonitor International Ltd ("Euromonitor"), significantly below other markets, offers further high growth potential for its online Marketplace.  The Marketplace extends beyond online as the Company continues digitalising the in-store shopping experience with its Mobile Commerce solution.

Fintech

Similarly, the Company believes that Kazakhstan's consumer finance sector also has significant growth potential, with Consumer Loans accounting for only 6.7% of GDP in 2019 (based on data from the National Bank of the Republic of Kazakhstan ("NBK") and the Ministry of National Economy of the Republic of Kazakhstan Committee on Statistics ("MNE")), as compared to 23.7% of GDP in China, 18.1% of GDP in Brazil, 8.7% of GDP in Turkey and 8.5% of GDP in Russia, based on data from Euromonitor and the IMF.

Significant Revenue Opportunity as Consumers use more of the Platforms

At present, only 34% of Active Consumers use the products and services of all three Platforms.

Considering that all of the Company's products and services are offered through the Kaspi.kz Super App, consumers can seamlessly navigate between the Company's complimentary Platforms. In addition to allowing the Company to increase the overall number of consumers, this gives it a further significant revenue opportunity if existing consumers use all of the Platforms.

Continually Introduce Innovative Digital Products through Kaspi.kz Super App

As an innovation-driven company Kaspi.kz has a proven track record of introducing cutting-edge digital products and services that have been quickly adopted by its customers and enabled it to continuously grow and expand its market share.

All of the Company's services are instantly available to its consumers through the Kaspi.kz Super App and as they use multiple services and products from the Payments, Marketplace and Fintech Platforms, this creates a virtuous cycle that drives long-term growth. The Company plans to grow further by continually introducing new innovative digital services through the Kaspi.kz Super App that will attract new users and increase the engagement of existing users.

In 2020 and 2021, the Company expects its latest products such as Kaspi QR payments, Kaspi PoS solutions and Online Merchant Finance to be additive to its revenue growth. 

The Company is also planning to enter the online travel business by the end of 2020, by launching the Kaspi Travel Platform through the Super App. The Company expects the Kaspi Travel Platform to initially offer air and railway tickets, with hotel and tour booking options to be added subsequently. By leveraging the Super App infrastructure, the Company aims to build a market leading and profitable mobile Travel Platform, while incurring limited marketing and transaction expenses.

Extend Service Offering to Merchants

Currently the Company has around 27.5 thousand Active Stores[16] in its Ecosystem and believe that another significant revenue opportunity will come from the additional services that it can provide to its merchants.

By the end of 2019, the Company started to roll-out Kaspi.kz POS solutions enabling merchants to accept in-store payments from the Kaspi.kz Super App by scanning a QR-code.  At the same time, the Company launched "Online Merchant Finance", a working capital finance product for its merchants. 

The Company is also developing its Kaspi Marketing functionality, which will enable all of its Payments and Marketplace merchants to promote their products through the Kaspi.kz Super App. 

The Company sees additional medium-term opportunities in various areas of merchant operations, including accounting, HR, logistics and inventory management.

Expansion into Selected Markets of Central Asia and the Caucasus

The Marketplace and Payments Platforms can be offered via the Super App to the population of any country of presence relatively easily, without significant capital expenditure requirements and the Company believes that this will enable it in the mid-term to efficiently expand into selected adjacent countries in Central Asia and the Caucasus. 

In line with this strategy, in 2019 the Company entered into Azerbaijan through the acquisition of three leading marketplace platforms.

Guidance

Supported by accelerated acquisition of new users in its Super App, demonstrated by a 72% increase in MAU year-on-year in the first half 2020, the Company expects acquired new users to engage across all the Platforms, therefore contributing to delivering strong growth across all the Platforms in 2020 and 2021:

Payments

In the near-term, the Company will be aiming to maintain year-on-year growth of its Payments Platform RTPV at a level of 80-85% in 2020, targeting a high 80% 2019-2021 compound annual growth rate ("CAGR").  The Company is also expecting average balances on current accounts to demonstrate high 60% year-on-year growth in 2020 compared to 2019 and achieve high 50% 2019-2021 CAGR.

The Company anticipates that its Payments Take Rate[17] will remain broadly flat in 2020 compared to 2019 and will remain at the same level in 2021.  The Company targets a low 50% and high 50% Net Income Margin for the Payments Platform in 2020 and 2021, respectively.

Marketplace

In the near-term, the Company will be aiming to maintain year-on-year growth of its GMV at a level between 25% and 30% in 2020 and at a 2019-2021 CAGR in the mid 50% by leveraging the Kaspi.kz Ecosystem to grow the Marketplace Platform's user base, driving engagement by adding new merchants, categories and cross-border capabilities, and by expanding mobile commerce through the Kaspi.kz Super App and Kaspi QR.  The Company expects its Marketplace Take Rate[18] to demonstrate slight year-on-year expansion in 2020, remaining flat from 2020 to 2021.  The Company anticipates that the Marketplace Platform's Net Income Margin will stand at the level of low 60% in 2020 and increase to mid 60% by the end of 2021 as it continues to balance operating leverage with new technology and product development investments.

Fintech

In 2020 the Company expects its TFV to demonstrate a year-on-year decline of around 10%, as a result of its more cautious approach to lending, which started in March 2020 following the onset of the COVID-19 pandemic.  At the same time, the Company expects its TFV to grow at a mid 30% CAGR from 2019 to 2021 on the back of its gradual recovery starting from summer 2020. The Company targets a TFV to Average Net Loan Portfolio Conversion Rate[19] of around 1.4 in 2020 and around 2.0 in 2021.  The Company expects its 2020 and 2021 Fintech Average Yield levels to remain largely flat to its 2019 Fintech Average Yield[20] of 32.2%.

The Company anticipates that its Fintech Net Income Margin will remain broadly stable in the medium-term due to its continued balancing of operating leverage with new technology and product development initiatives.

In the near-term, the Company will also aim to maintain a stable cost of risk through the expansion of its Ecosystem, which allows the constant enrichment of proprietary data and, combined with technology improvements, help it to better manage risk.

The Company anticipates that its Fintech Net Income Margin will remain broadly stable in 2020 at the level of mid 30% and increase to high 30% in 2021.

 

For additional information please contact:

JSC Kaspi.kz

David Ferguson +44 7472 751 275

david.ferguson@kaspi.kz

 

IMPORTANT NOTICE

 

The information contained in this announcement is for background purposes only and does not purport to be full or complete, nor does it constitute or form part of any invitation or inducement to engage in any investment activity, nor does it constitute an offer or invitation to buy or subscribe for any securities, in any jurisdiction including the United States, or a recommendation in respect of buying, holding or selling any securities. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. The contents of this announcement are not to be construed as legal, financial or tax advice. None of the Company, the Selling Shareholders, the Banks (as defined below) or their respective affiliates undertake to provide the recipient of this announcement with any additional information, or to update this announcement or to correct any inaccuracies, and the distribution of this announcement shall not be deemed to be any form of commitment on the part of the Selling Shareholders to proceed with the Offering or any transaction or arrangement referred to therein. This announcement has not been approved by any competent regulatory authority.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan, South Africa or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for, or otherwise invest in, securities to any person in the United States, Australia, Canada, Japan, South Africa or in any jurisdiction to whom or in which such offer or solicitation is unlawful. Any securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. The possible offer and sale of any securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan or South Africa.  Subject to certain exemptions, any securities referred to herein may not be offered or sold in Australia, Canada, Japan or South Africa or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan or South Africa. There will be no public offering of any securities in the United States, Australia, Canada, Japan, South Africa or elsewhere.

In any member state of the European Economic Area (each, a "Relevant Member State"), this announcement and any offer if made subsequently is, and will be, directed only at persons who are "qualified investors" within the meaning of Article 2(e) of the Prospectus Regulation (Regulation (EU) 2017/1129) and amendments thereto ("Qualified Investors").

In the United Kingdom, this announcement is only being distributed to and is directed at Qualified Investors (a) having professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act (Financial Promotion) Order 2005, as amended (the "Order"); (b) who are high net worth entities described in Article 49(2) (a) to (d) of the Order; or (c) other persons to whom they may lawfully be communicated (all such persons together being referred to as "Relevant Persons"). Any investment or investment activity to which this announcement relates will only be available to and will only be engaged in with Relevant Persons. Any person who is not a Relevant Person should not act or rely on this announcement or any of its contents.

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (B) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any 'manufacturer' (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the GDRs have been subject to a product approval process, which has determined that such GDRs are: (i) compatible with an end target market of investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the GDRs may decline and investors could lose all or part of their investment; the GDRs offer no guaranteed income and no capital protection; and an investment in the GDRs is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offering. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Managers will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase or take any other action whatsoever with respect to the GDRs.

Each distributor is responsible for undertaking its own target market assessment in respect of the GDRs and determining appropriate distribution channels.

The information contained herein is not an offer, or an invitation to make offers, to sell, purchase, exchange or otherwise transfer securities in Kazakhstan to or for the benefit of any Kazakhstani person or entity, except for those persons or entities that are capable to do so under the legislation of the Republic of Kazakhstan and any other laws applicable to such capacity of such persons or entities. This announcement shall not be construed as an advertisement (i.e. information intended for an unlimited group of persons which is distributed and placed in any form and aimed to create or maintain interest in Joint Stock Company Kaspi.kz and its merchandise, trademarks, works, services and/or its securities and promote their sales) in, and for the purpose of the laws of Kazakhstan, unless such advertisement is in full compliance with Kazakhstan laws. No future dividends under, and/or increase of market value of the securities of Joint Stock Company Kaspi.kz are guaranteed whether explicitly or by any implication whatsoever.

None of Morgan Stanley & Co. International plc, Citigroup Global Markets Limited or Renaissance Capital (together, the "Banks") or the Selling Shareholders nor any of their respective affiliates, directors, officers, employees, advisers, agents or any other person, accepts any responsibility or liability whatsoever for the contents of, or makes any representations or warranties, express or implied, as to the accuracy, fairness or completeness of the information presented or contained in this announcement (or whether any information has been omitted from this announcement) or any other information relating to the Group, its subsidiaries and their associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith. Accordingly, each of the Banks, the Selling Shareholders and their respective affiliates, directors, officers, employees, advisers, agents and any other person acting on any of their behalf expressly disclaims, to the fullest extent possible, any and all liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of this announcement, whether in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

Each Bank is authorised by the UK Prudential Regulation Authority (the "PRA") and regulated by the FCA and the PRA. Each Bank is acting exclusively for the Company and no one else in connection with the matters referred to in this announcement, and will not regard any other person as their respective clients in relation to the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for providing advice in relation to the matters referred to in this announcement, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

 

Certain statements in this announcement are not historical facts and are "forward looking" within the meaning of Section 27A of the U.S. Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934. Forward looking statements include statements concerning the Company's plans, expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, its competitive strengths and weaknesses, plans or goals relating to development projects, financial position and future operations and development, the Company's business strategy and the trends the Company anticipates in the industries and the political and legal environment in which it operates and other information that is not historical information. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward looking statements will not be achieved. Given these risks and uncertainties, be cautioned not to place undue reliance on such forward looking statements. The Company does not intend and does not assume any obligation to update any forward looking statement contained herein.

 

In addition, this announcement contains information concerning the Group's industry and its market and business segments generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the industry, and the Group's market and business segments, will develop. These assumptions are based on information currently available to the Company. If any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While the Company does not know what effect any such differences may have on the Group's business, if there are such differences, they could have a material adverse effect on the Group's future results of operations and financial condition.

 

Any subscription or purchase of securities in the possible Offering should be made solely on the basis of information contained in the Prospectus which may be issued by the Company in connection with the Offering. The information in this announcement is subject to change. Before subscribing for or purchasing any securities in the possible Offering, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus if published. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. Neither this announcement, nor anything contained in the Registration Documented referred to herein, shall form the basis of or constitute any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities in the possible Offering or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.

 

The Company may decide not to go ahead with the IPO and there is therefore no guarantee that a Prospectus will be published, the Offering will be made or Admission will occur. Financial decisions should not be based on this announcement. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested.

 

Persons considering making investments should consult an authorised person specialising in advising on such investments. Neither this announcement, nor the Registration Document referred to herein, constitutes a recommendation concerning a possible offer. The value of shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of a possible offer for the person concerned.

 

For the avoidance of doubt, the contents of the Company's website or the website of any other member of the Group are not incorporated by reference into, and do not form part of, this announcement.

 

[1] Source: NBK.

[2] A financial metric calculated for any period as the total value of goods and services sold across the Company's Marketplace Platform, expressed in millions of tenge.

[3] Source: Euromonitor (market size estimate).

[4] Source: MNE (total retail market spending estimate).

[5] Source: NBK.

[6] An operating metric calculated for any period as the total number of consumers which have used any of the Group's products or services at least once during the respective 12 months, expressed in thousands of consumers as of the end of any such period.

[7] A financial metric calculated for any period as the sum of RTPV and total value of other payment transactions made by Active Consumers within the Payments Platform, which are made free of charge within Kaspi Ecosystem (such as P2P payments), expressed in millions of tenge.

[8] A financial metric calculated for any period as the total value of revenue-generating transactions made by Active Consumers within the Payments Platform, expressed in millions of tenge.

[9] Source: MNE.

[10] A financial metric calculated for any period as the total value of loans to customers issued within the Fintech Platform, expressed in millions of tenge.

[11] Source: SimilarWeb.

[12] Average DAU to MAU ratio is an operating metric calculated as average DAU for any period divided by the MAU for the respective period, expressed as a percentage. DAU is an operating metric calculated as the simple average of the daily number of users with at least one discrete session (visit) in excess of 10 seconds on the Super App for the last month of each relevant period.

[13] A consumer satisfaction metric based on regular polls conducted by the Group, wherein consumers are asked how likely they are to recommend the Group's services to friends and relatives on a scale from 0 to 5.  Net Promoter Score is then calculated by subtracting the share of consumers giving 1,2,3 from the share of consumers giving 5.

[14] Source: CustomerGuru.

[15] Source: Euromonitor.

[16] Active Stores is an operating metric calculated for any period as the total number of offline stores that have successfully completed the sale of goods or services to a consumer on our Marketplace Platform at least once during the respective 12 months, expressed in thousands of stores as of the end of any such period.

[17] Payments Take Rate is a financial metric calculated for any period as the ratio of transaction and membership revenue excluding Kaspi Business revenue to RTPV, expressed as a percentage.

[18] Marketplace Take Rate is a financial metric calculated for any period as the ratio of seller fees to GMV, expressed as a percentage.

[19] TFV to Average Net Loan Portfolio Conversion Rate is a financial metric calculated for any period as TFV for the respective 12-month period (on a rolling basis) divided by the Fintech Average Net Loan Portfolio for the respective period. This is a non-IFRS measure. Fintech Average Net Loan Portfolio is a financial metric calculated for any period as the average balance of the Fintech Platform net loan portfolio for each respective year based on the respective monthly average balances, expressed in millions of tenge. This is a non-IFRS measure.

[20] Fintech Average Yield is a financial metric calculated for any period in respect of the Fintech Platform as the sum of interest income and banking fee divided by the Fintech Average Net Loan Portfolio, expressed as a percentage and annualised in case of interim periods. Fintech Average Yield is a non-IFRS performance measure.

 

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