The national airline's transformation and IPO preparation efforts will be accelerated
Uzbekistan
President Shavkat Mirziyoyev reviewed a presentation on accelerating the transformation and IPO preparations of Uzbekistan Airways.
In recent years, systematic work has been underway to reform large state-owned enterprises and implement international corporate governance and reporting standards. A key step in this process was the creation of the National Investment Fund and the engagement of Franklin Templeton to manage it.
Last month, the National Investment Fund placed assets worth $690 million on the international market for the first time. This sent an important signal of Uzbekistan's readiness to operate within the rules of global capital markets. Demand during the placement was four times higher than supply, with major investors receiving bids totaling nearly $3 billion.
The next task is to accelerate the transformation processes at the 13 large companies in the fund's portfolio and prepare them for IPOs. Specifically, work is scheduled to be completed this year on companies such as Uzbekistan Airways, Uzsanoatqurilishbank, Uzbekhydroenergo, Uzbekistan Milliy Elektr Tarmoqlari, and Uzbektelecom.
The organization of these processes was discussed during the presentation using the example of Uzbekistan Airways JSC.
Representatives of Franklin Templeton conducted a diagnostic of the national airline's operations and developed a transformation program, including 115 measures. According to calculations, with full implementation of this program, the company has every potential to increase its annual operating profit by $120 million.
In particular, it was noted that additional revenue can be generated through route optimization, increased direct sales, improved customer service, reduced flight intervals, reduced flight cancellations, and delays, improved efficiency of enterprises within the joint-stock company providing services such as catering and technical maintenance, as well as rapid adaptation to market conditions and the recruitment of qualified specialists.
As a result of these measures, the airline's market value could increase from $1.6 billion to $2.3 billion. However, it was noted that, despite the program being developed several months ago, the pace of its implementation remains slow.
The head of state emphasized that, in order to prepare the company for the international capital market, it is primarily necessary to dramatically improve the quality of management, strengthen financial discipline, maintain reporting in accordance with international standards, and improve its credit rating.
By the end of the year, it is planned to sell 15-20 percent of the national airline's shares through an international IPO. To this end, practical measures have been identified to objectively assess the company's performance, increase its investment attractiveness, write off specialized aircraft from the company's balance sheet, and implement a compensation mechanism for services rendered under government contracts.
During the presentation, it was noted that the high growth rate of tourism also places new demands on the airline. Since the beginning of the year, tourist flow to our country has increased by 27.5 percent, reaching almost 5.5 million people. The number of tourists from China, Malaysia, Japan, and the United States has increased particularly significantly.
However, it was noted that the national airline is unable to quickly adapt to this growth. Delays in fleet expansion are being observed.
In this regard, the task has been set to organize the airline's procurement system separately, ensure prompt decision-making on fleet expansion, and implement international practices in these processes.
The President of our country emphasized that every opportunity exists to transform Tashkent into the largest aviation hub in Central Asia. To achieve this, it is necessary to coordinate interactions between Uzbekistan Airways, Uzbekistan Airports, and New Tashkent Airport within a unified system, and to develop interconnected infrastructure, routes, and transit networks.
Responsible officials have been instructed to establish a separate project office for the systematic management of the transformation of companies in the National Investment Fund's portfolio, to attract specialists with in-depth knowledge of international financial market requirements and practical experience to the companies' management bodies, to develop a clear IPO preparation schedule for each company, and to ensure strict oversight of its implementation.
Last month, the National Investment Fund placed assets worth $690 million on the international market for the first time. This sent an important signal of Uzbekistan's readiness to operate within the rules of global capital markets. Demand during the placement was four times higher than supply, with major investors receiving bids totaling nearly $3 billion.
The next task is to accelerate the transformation processes at the 13 large companies in the fund's portfolio and prepare them for IPOs. Specifically, work is scheduled to be completed this year on companies such as Uzbekistan Airways, Uzsanoatqurilishbank, Uzbekhydroenergo, Uzbekistan Milliy Elektr Tarmoqlari, and Uzbektelecom.
The organization of these processes was discussed during the presentation using the example of Uzbekistan Airways JSC.
Representatives of Franklin Templeton conducted a diagnostic of the national airline's operations and developed a transformation program, including 115 measures. According to calculations, with full implementation of this program, the company has every potential to increase its annual operating profit by $120 million.
In particular, it was noted that additional revenue can be generated through route optimization, increased direct sales, improved customer service, reduced flight intervals, reduced flight cancellations, and delays, improved efficiency of enterprises within the joint-stock company providing services such as catering and technical maintenance, as well as rapid adaptation to market conditions and the recruitment of qualified specialists.
As a result of these measures, the airline's market value could increase from $1.6 billion to $2.3 billion. However, it was noted that, despite the program being developed several months ago, the pace of its implementation remains slow.
The head of state emphasized that, in order to prepare the company for the international capital market, it is primarily necessary to dramatically improve the quality of management, strengthen financial discipline, maintain reporting in accordance with international standards, and improve its credit rating.
By the end of the year, it is planned to sell 15-20 percent of the national airline's shares through an international IPO. To this end, practical measures have been identified to objectively assess the company's performance, increase its investment attractiveness, write off specialized aircraft from the company's balance sheet, and implement a compensation mechanism for services rendered under government contracts.
During the presentation, it was noted that the high growth rate of tourism also places new demands on the airline. Since the beginning of the year, tourist flow to our country has increased by 27.5 percent, reaching almost 5.5 million people. The number of tourists from China, Malaysia, Japan, and the United States has increased particularly significantly.
However, it was noted that the national airline is unable to quickly adapt to this growth. Delays in fleet expansion are being observed.
In this regard, the task has been set to organize the airline's procurement system separately, ensure prompt decision-making on fleet expansion, and implement international practices in these processes.
The President of our country emphasized that every opportunity exists to transform Tashkent into the largest aviation hub in Central Asia. To achieve this, it is necessary to coordinate interactions between Uzbekistan Airways, Uzbekistan Airports, and New Tashkent Airport within a unified system, and to develop interconnected infrastructure, routes, and transit networks.
Responsible officials have been instructed to establish a separate project office for the systematic management of the transformation of companies in the National Investment Fund's portfolio, to attract specialists with in-depth knowledge of international financial market requirements and practical experience to the companies' management bodies, to develop a clear IPO preparation schedule for each company, and to ensure strict oversight of its implementation.
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