Feb 21

Russia’s Baring Vostok Hits Paydirt With

Kenneth Rapoza
Oct 28, 2020


This has turned out to one of the best companies that Moscow-based private equity firm Baring Vostok ever bought. It’s

For those who have never heard of it, it’s the fintech arm of Kaspi Bank, Kazakhstan’s biggest bank, and it just happened to be the second largest IPO on the London Stock Exchange this year. The company is now valued at close to $8 billion. For a Kazakh tech firm, that’s a mega cap.

“Baring Vostok is proud to be part of that success story,” said a Baring Vostok spokesperson. “ earned not only the love of its customers in Kazakhstan, but also the recognition of international investors. Their team, led by the visionary Mikhail Lomtadze, has truly created an advanced digital services ecosystem with what we think will be a sustainable and efficient business model.”

Born in the Black Sea city of Batumi, Georgia, Lomtadze has been a Baring Vostok man since 2002, when he was an investment manager. He got his MBA from Harvard Business School. In 2004, he became a partner at Baring and was in charge of the portfolio that included parent company, Kaspiyskiy Bank. He was also a board chairman there between 2007 – 2018, giving him a front-row seat to what Kaspi Bank had to offer. In 2014, he was one of the brains behind the operation and has been building it out ever since.

Lomtadze and Baring initially wanted to take public in late 2019. But market conditions were not good, they said. How could they possibly be good now, one might ask? Given the love affair the world’s investment managers have with tech, Kaspi had as good a chance as any with getting some of that love sent their way.

They did.

The stock opened at $38 per share and traded as high as $46.90, with volume of more than 4.4 million shares on its first day of trading. That’s more than Russia’s Yandex trading volume, which averages 3.8 million per day.

Since then, the volume has fallen back to more frontier-market levels at around 10,000 shares a day. But the share price is now around $42. The company’s market cap has risen by more than $1 billion in less than 10 days.

Lomtadze said the recent IPO was “a strong validation of our future growth prospects (and) will allow some of the world’s largest investors to join us as we continue to play a leading role in Kazakhstan’s rapidly evolving digital transformation.”

Kaspi owns the Super App, the most popular mobile app in Kazakhstan and the foundation for everything they do for both retail and business customers, including banking and e-commerce. The company says it has more than 7.8 million monthly active users.

On the e-commerce side, Kaspi is the biggest in Kazakhstan by sales value as of 2019, with an e-commerce gross merchandise value (GMV) share of 46% of the market. The company’s GMV value for all of Kazakhstan retail was 5.5% last year.

Lomtadze told Euromoney magazine back in January that Baring Vostok had a “clear goal” to build on Kaspi Bank’s competitive advantage. They were quick to market, often first to market. was the beneficiary of those early steps into an entirely new business landscape still in its infancy in Kazakhstan. “You can accomplish this only by being data-driven and technologically advanced. We felt that would be our biggest source of competitive advantage in the years to come,” he said.

Kaspi Bank, founded in 2002, was a basic, run-of-the-mill bank, catering to a mix of corporations and small- to mid-sized companies looking for loans before Baring Vostok came to town.

The private equity giant was hoping to accomplish something similar to Kaspi with far-east Russian lender, Vostochny Bank. But that has since stalled due to an ongoing shareholder dispute. “Vostochny could have followed the route now taken by Kaspi Bank,” says Chris Weafer, CEO of Macro Advisory. operates primarily in Kazakhstan, but its market is not limited to that. Central Asia has a total population of around 74 million people. Most do not have access to banking services and about 55.2% of the region’s population live in rural areas where financial inclusion is limited — a boon for fintech in general, according to a report by Astana International Financial Center titled “The State of Fintech in Central Asia: How Kazakhstan Drives the Regional Fintech Industry”, published in June.

Baring Vostok is known for picking tech winners. They were an early investor in Yandex and exited that position in 2016.

The funds’ first well-known investment was FGI Wireless, which later became Vimpelcom, one of Russia’s largest mobile phone operators. 

Since 1994, Baring Vostok funds have invested more than $850 million into 30 companies in the internet, software, media, and telecommunications sector. Their latest prize holding is e-commerce market leader Ozon, dubbed the “Russian Amazon.” According to media reports, Ozon may hold an IPO in New York as soon as the end of this year.

“Baring Vostok has one of the strongest track records of investors in technology and fintech companies in Russia and Eurasia,” says Weafer. “In almost all cases the Baring Vostok contribution has been an acknowledged factor in the growth and development of the business and, in many instances, the realization of value for itself and other shareholders through a public listed or strategic sale.”

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