Jysan Weighs Acquisition of Kcell to Bolster Kazakh Lending

A Kazakh financial group is looking at buying a controlling stake in mobile-phone operator Kcell to expand its online retail business, according to people with knowledge of the matter.

Jysan group, whose two banks combined rank third in Kazakhstan by assets, is seeking to acquire Kazakhtelecom’s 75% of Kcell, three people said, asking not to be identified because the discussions are private. The state-run telecommunications company bought the stake for $446 million in 2018, when the mobile operator’s market capitalization was almost $1 billion. It’s now about $1.2 billion.

An agreement hasn’t been finalized and a deal may not happen, according to the people.

Kazakhtelecom “isn’t currently considering” a sale of a mobile operator, the company said in response to a request for comment. Kcell referred the question to its shareholder. Jysan Bank declined to comment.

Kazakh banks have been mired in a crisis for over a decade, hobbled by problem loans despite receiving billions of dollars in multiple government bailouts. In 2019, Jysan, formerly known as Tsesnabank, was bought by a fund set up by Nursultan Nazarbayev, the “leader of the nation” and the country’s first president, as part of a 1 trillion tenge ($2.4 billion) central bank rescue.

Even so, consumer lending and online platforms have been booming in Kazakhstan after the government last year loosened retail-lending regulations. Banks are now allowed to assess risk based on an individual’s overall spending, including on utilities and phone bills, rather than official salaries.

The Kcell acquisition would give Jysan Bank access to the mobile operator’s subscriber base of 8 million, the second-largest in Kazakhstan. The lender is seeking to challenge Kaspi.kz, the central Asian country’s biggest fintech operator, which offers digital banking and online marketplace services in one app.

Kaspi.kz’s share price has more than doubled since its listing in London last year. The company has a value about 3.5 times higher than Halyk Bank, Kazakhstan’s biggest lender.

Jysan Bank formed a “virtual mobile operator” using Kazakhtelecom infrastructure in November and built an ecosystem around its own Jmart marketplace. Last year, the lender also bought ATF Bank. The affiliated Jysan Ventures bought KazTransCom, an internet infrastructure operator last month, according to filings to the Kazakhstan Stock Exchange.

Kcell’s board has asked shareholders to vote April 9 to delist in London and from the Astana International Exchange and consolidate trading on the KSE in Almaty, according to a company filing.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.