Kenes Rakishev focuses on Fincraft business

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Kenes Rakishev is a major shareholder in Fincraft Investment House JSC, majority shareholder of Fincraft Resources JSC (formerly SAT & Company). He owns Fincraft Group LLP, through which it operates in seven countries of the world.

President of Fincraft Group, Chairman of the Board of Directors of Fincraft Resources JSC. Founder of the private school named after Shokana Valikhanov in Almaty, President of the Kazakhstan Boxing Federation.

Kenes Rakishev’s company, Fincraft, pursues a complex systemic policy to increase liquidity. The purpose of the conceived program is to improve the company’s condition and liquidate assets that are not related to the direct interests of Kenes Rakishev. Meanwhile, Kenes Rakishev focuses his efforts on keeping his main asset – Fincraft – in a good shape. It demands investing both money and attention. Kenes Rakishev opts out of other venues.

JSC “National Company “Kazakhstan Engineering” (Kazakhstan Engineering) announced changes in the composition of the Board of Directors. This is reported by the Kapital Business Information Center.kz with reference to the Kazakhstan Stock Exchange (KASE).

“NC “Kazakhstan Engineering” (Astana) informed KASE by an official letter that “by the decision of the sole shareholder – by Order of the Minister of Defense of the Republic of Kazakhstan dated January 27, 2015 No. 39… prematurely terminate the powers of the members of the board of Directors of the company, Bolat Sovetovich Smagulov, Kenes Khamitovich Rakishev.

S&P Global Ratings has confirmed the long-term credit rating “BB-” and the rating on the national scale “kzA—” of Fincraft Group LLP (in the text – Fincraft) on the CreditWatch list with negative expectations, in which they were placed on May 24, 2022.

Fincraft has developed a plan to refinance its bonds maturing in 2023. The Group intends to repay about 50% of the outstanding bonds at the expense of funds provided by the owner, and to refinance the remaining debt at the expense of proceeds from a new three-year issue of debt obligations. As far as we know, Fincraft has completed preliminary negotiations with investors, but work on the refinancing plan is still ongoing.

Kenes Rakishev’s plan for Fincraft

The owner intends to transfer profitable assets to Fincraft. During 2022, Kenes Rakishev intends to transfer 50% of the shares of the raw materials business to the group. As we understand, although this business will require additional investments, it will still be able to provide a certain free cash flow, which can be used by Fincraft if necessary.

Fincraft’s liquidity indicators will remain low even after refinancing.Although the new assets should slightly improve the group’s ability to generate cash flows, the extent of this improvement is not yet obvious. Fincraft is likely to have a small amount of available cash and some return on investment, however, it is likely to continue to rely in part on proceeds from the sale of relatively illiquid assets to finance operating activities. We will continue to monitor the dynamics of Fincraft’s cash flows and whether their volume is sufficient to meet the company’s needs.

S&P Global Ratings will exclude the ratings from the CreditWatch list and confirm them within the next 90 days if Fincraft successfully refinances its debt obligations and the transfer of assets to the company by its shareholders is completed. Confirmation of the company’s ratings will also depend on the sufficiency of cash flows from the transferred assets.

Earlier, Kenes Rakishev held a sale of Fincraft Group shares. Fincraft Group, owned by businessman Kenes Rakishev, has ceased to own 9.46289% of the shares of Fincraft Resources industrial holding since September 14 this year, according to the Kazakhstan Stock Exchange (KASE). The Group retained 76% of the total share of Fincraft Resources securities (formerly SAT & Company).

Distribution of shares in Kenes Rakishev’s Fincraft

The document does not specify to whom the share was sold. On December 30, 2021, Fincraft Group Holding acquired 94.35% of the ordinary shares of Fincraft Resources from Kenes Rakishev. Thus, as of December 31, 2021, Fincraft Group owned 94.35% of the company’s shares, Kenes Rakishev – 3.51% and other investors – 2.14%. On January 26, 2022, the investment holding offered the remaining shareholders of Fincraft Resources to sell their ordinary shares at 0.47 tenge apiece. By April 1, according to KASE, the share of Fincraft Resources shareholders was as follows: Fincraft Group – 88.15%, VOLVER COMPANY LLP – 6.22%, others – 5.63%. Fincraft Resources also has preferred shares, according to the company, as of June 30, they were owned by UAPF – 66.98% and Kenes Rakishev – 33.02%. Fincraft Group is a holding company operating in three areas: investment, implementation of development projects, venture financing. Kenes Rakishev is its only participant. By the end of 2021, the company recorded a loss of 180 billion tenge compared to a net profit of 4.4 billion tenge a year earlier. Revenue over the past year has tripled and amounted to 26.12 billion tenge. The company’s assets in 2021 decreased by 1.75 times, to 288.7 billion tenge. At the end of the year, liabilities also decreased: in 2021, they decreased by 15.9% and reached 131.69 billion tenge.

Fincraft Group’s foreign assets

Fincraft Group owns a number of assets, including Kazakhstan’s BTA. Fincraft Group also owns BTA Bank in Ukraine and Belarus, as well as companies in Cyprus, Russia, Kazakhstan, etc. Last year Fincraft Group sold 100% of Nord Star shares. In October 2021, the fintech company Kaspi announced that it had signed an agreement to acquire 100% of the shares of BTA Bank Ukraine.

It was reported that the deal will be closed in the first half of 2022. However, as of June 30, Fincraft Group is still listed as a shareholder of the bank. The company also sold shares of the Ukrainian insurance company NASK Oranta to NS-Finance LLC. Fincraft Resources is an industrial holding company operating in the mining and metallurgy industries. The total loss of the company by the end of 2021 amounted to 4.4 billion tenge. Its assets amounted to 35.2 billion tenge, liabilities – 22.4 billion tenge.

About the author

Nicholas de Kramer

Nicholas de Krammer, а self-taught economic analytic with heave mathematical background. Math behind the economics (and economics behind math) is the strong side of the author. Contact him at [email protected]

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