Uzbekistan’s largest-ever public market transaction has shifted attention from fundraising to the deeper challenge of building a functioning capital market. The listing of the National Investment Fund of Uzbekistan, managed by Franklin Templeton, raised more money than all previous IPOs in the country combined over the past 30 years, according to Marius Dan, Central Asia CEO at Templeton Global Investments.
For investors and market operators, the transaction has drawn attention to a wider issue: how Uzbekistan develops the rules, institutions and market depth needed to support capital markets, debt financing, venture capital and private investment.
“What investors really want to know is that they’ll put their money in and that they will get their money back,” Julia Hoggett, chief executive of the London Stock Exchange, told Euronews. Hoggett said investors usually begin by looking at a country’s fundamentals, including currency stability, inflation, economic growth, population trends and assets, before turning to the regulatory environment.
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Building the infrastructure behind investment
Uzbekistan is preparing new financial legislation as it seeks to expand the range of financing available to companies and investors. Laziz Kudratov, the country’s minister of Investment, Industry and Trade, told Euronews that legislation establishing the Tashkent International Financial Centre is expected to be signed soon.
Dan said the National Investment Fund listing showed that international investors were willing to participate when transactions were structured in the right way. “The initial public offering of the National Investment Fund shows that, in the right structure, investors are very keen to participate in the capital markets of the country,” he said.
Creating a deeper market
Dan said Uzbekistan’s capital market would need more companies, greater liquidity and more foreign institutional investors in the coming years. He said continued listings of state-owned enterprises, both within and outside the National Investment Fund’s portfolio, would be important in broadening the investment universe.
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Local debt markets are also beginning to attract more attention, he said, with retail investors looking more closely at investment opportunities inside Uzbekistan. Kudratov said reforms introduced since 2017 had changed the investment environment through tax reforms, currency liberalisation and the removal of restrictions on profit repatriation.
“Any investor can come, invest and get their revenues out of the country within one day,” he said. For Hoggett, investor confidence also depends on a proven track record.
Broadening participation
The growth of local debt markets and the entry of more retail investors are early signs that Uzbekistan’s financial market is beginning to widen beyond foreign institutional capital, according to Dan. Hoggett said public markets can play a wider role by opening investment opportunities to more participants. “The public markets are democratising,” she said. Hoggett added that private companies are often owned by a relatively small group of investors, while public markets allow a broader range of investors to access company growth. That wider access comes with stronger disclosure requirements for issuers.
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For Uzbekistan, broader participation would mean more than attracting foreign capital. It would also involve creating opportunities for domestic investors to participate in the growth of listed companies, debt markets and other financial products.
Governance and market discipline
Governance remains central to the development of Uzbekistan’s capital markets. Dan said several companies within the National Investment Fund’s portfolio had already introduced board-level changes, including the appointment of independent directors. “Corporate governance is key,” he said. He described stronger oversight of state-owned companies as part of improving their operations.
Hoggett said public markets also impose discipline on companies seeking capital. “The first rule of doing an IPO is meet your estimates, hit what you say you’re going to do,” she said. That requires companies to build systems, controls, accounting capacity, finance teams and planning processes, she noted. Hoggett added that such structures can help companies operate at scale and grow faster.