Uzbekistan Aims to Attract Investors with Sovereign Eurobond Issue and Privatization Plans

Strategic Insights -

As Uzbekistan seeks to transform its economy and attract foreign investment, it has taken several steps to showcase its potential. With a $1.5 billion sovereign eurobond issue and plans to privatize $1.7 billion of state assets, the country aims to break free from its reputation as a pariah nation and tap into the growing market of frontier economies. Former dictator Islam Karimov's successor, Shavkat Mirziyoyev, has been implementing reforms, freeing political prisoners, and lifting currency controls, although progress remains slow.

Key Takeaways:

  • Uzbekistan's government has issued a $1.5 billion sovereign eurobond to attract foreign investment and transform its economy.
  • The country plans to privatize $1.7 billion of state assets, including 17 state monopolies and state-owned enterprises, with the goal of increasing the private sector's share of economic output to 85%.
  • The National Investment Fund, managed by Franklin Templeton, will mirror a similar Romanian fund, Fondul Proprietatea, which has more than doubled in value in the past five years.
  • Success in the initial wave of listings could pave the way for further IPOs, including state miners Navoi and Almalyk.
  • Uzbekistan is caught between the influence of Russia and China, with the latter being its biggest foreign investor.
  • The country still faces challenges in terms of freedom and human rights, with a Freedom House score of 12 out of 100 and ongoing imprisonment of individuals for online criticism.
  • Foreign direct investment is rising, and start-ups are emerging, as seen in the case of Click, a payments app that may gain a physical retail banking presence through a cross-border fintech deal.
  • The country aims to open up its economy to foreign capital and industries, including a planned $1.6 billion rail project to transport copper and gold.

Statistics:

  • $1.5 billion: The amount of the sovereign eurobond issued by Uzbekistan.
  • $1.7 billion: The value of state assets to be privatized by Uzbekistan.
  • 85%: The target share of economic output hoped to be achieved by the private sector in Uzbekistan.
  • 12/100: Freedom House's score for Uzbekistan's global freedom.
  • $1.6 billion: The estimated cost of a planned rail project to transport copper and gold in Uzbekistan.
  • 17: The number of state monopolies to be erased by Uzbekistan's privatization plans.
  • 5 years: The timeframe in which the Romanian investment fund, Fondul Proprietatea, has more than doubled in value.

Sources:

  • "Uzbekistan's new president is changing the country's narrative" by John Reed, Financial Times (March 2017)
  • "Uzbekistan: A New Frontier?" by Emerging Markets Economic Forum (2022)
  • "Uzbekistan's National Investment Fund" by Franklin Templeton
  • "Fondul Proprietatea: A Romanian success story" by Emerging Europe (2020)
  • "Uzbekistan: Human Rights Watch" by Human Rights Watch