PEOPLE’S IPO AS ECONOMIC AND SOCIAL INNOVATION

The experience of studying the materials of foreign IPO procedures shows that the initial public offering of shares is usually carried out under favorable economic conditions. In Kazakhstan, the «People’s IPO» was also conducted in the situation of the economic growth. Large-scale provision of private investors and, primarily, public at large with the opportunity to become owners of the largest companies’ equities gives a fresh impetus to the development of the economy.

The article focuses on the specifics of the IPO as an investment instrument taking into account foreign experience in share floating, achievements and challenges, the first IPO program in Kazakhstan by an example of «KazTransOil», its difference from similar programs in other countries.

The research into practical materials of programs similar to the «People’s IPO» program implemented in several countries was carried out by the authors in 2011–2013 using the comparative analysis method.

The results of floating shares in «KazTransOil» JSC, the largest pipeline operator in Kazakhstan, have demonstrated a good financial awareness of the Kazakhstan population as well as its high level of interest in investing in shares and pension funds, which was evidenced by the 2.1 times excess of demand over supply. A significant number of applications received from citizens exceeded the maximum allowable amount per individual.

These facts show that a certain part of the population prefers investing in shares, which is more risky compared with bank deposits but promises higher incomes in the case of success.

The results of the first experience with floating shares in KazTransOil JSC may be considered successful for the issuer — the IPO covered nearly 35 thousand applications for shares from private investors totaling 27.9 billion Tenge.

The success of the «People’s IPO» of the «KazTransOil» JSC shares indicates a high level of «elaboration», the viability of the national IPO program of Kazakhstani economy flagship stocks due to its conceptual simplicity, transparency and efficiency.

Further implementation of the «People’s IPO» Program allows issuers, the largest domestic companies, to continue the formation of the internal loan market to ensure their business development as well as provides the increase of Kazakhstani people’s assets and the development of financial literacy of the population in the country. 

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