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AFC Uzbekistan Fund November 2019 Update

Dear Investors and Friends,

During November a spotlight was cast on Uzbekistan’s capital markets when on 15th November the Capital Markets Development Agency (CMDA) organized an investor conference in Tashkent which brought together over 300 participants to discuss the future outlook for the industry. Another important milestone which occurred mid-month was the AFC Uzbekistan Fund having made its first investments into banking stocks. We gained exposure to Uzbekistan’s largest private bank, Hamkor Bank, which trades at a P/E of 2.24x and a P/B of 0.61, and had year over year equity growth of 42%.

November saw the NAV of the fund increase to an estimated USD 1,076 (+1.20%), according to internal calculations.


AFC Uzbekistan Fund valuations as of 30th November 2019:

Estimated weighted harmonic average trailing P/E (only companies with profit): 4.04x
Estimated weighted harmonic average P/B:   0.68x
Estimated weighted portfolio dividend yield: 8.74%


Privatizations set to accelerate:

During November the CMDA announced it will be short-listing 20 companies for IPO/SPO through the Tashkent Stock Exchange, with the official list to be published by February 2020. It has already been publicised that 12% of the Uzbek Commodities Exchange (TSE: URTS) and 5% of glass producer Kvarts (TSE: KVTS) are slated for near term privatization (the privatization of KVTS is ongoing and that of URTS should occur within the coming months). Following these two companies, Jizzakh Plastics, a plastics producer, is preparing to conduct a secondary offering where it will issue 20% new equity to be used for expansion. Future listings and privatizations will likely include Navoi Metallurgical Mining Company (NMMC), Uzmet Kombinati (TSE: UZMK), oil & gas producer Uzbekneftegaz and the national airline, Uzbek Airways, among others.

While most of these privatizations should occur in a single transaction, others will occur in stages—for example the government aims to privatise 20% of Kvarts through the stock exchange in tranches of 5% so as to ensure the issues are fully taken up by investors. Privatizing millions of dollars of state shares at once through the stock exchange would likely be ineffective at present as local investors are active, but not active enough to absorb tens of millions of dollars in new shares, while foreign institutional investors are only just beginning to enter the market, with AFC having led the pack. A slow but steady privatization of companies in our view is better as it gives local investors the opportunity to understand the value in some of these privatizations and also prevents single investors from gaining control of state assets, often at quite attractive prices.

Uzpromstroy Bank issues USD 300 mln 5-year Eurobond:

On 25th November Uzpromstroy Bank (TSE: SQBN), the “Uzbekistan Reconstruction and Development Bank” issued a USD 300 mln 5-year Eurobond with a YTM of 5.75% (initial expectations were for 6.5%) which was 4x oversubscribed. SQBN’s credit profile is rated as BB- with a Stable outlook by S&P.

As local banks face capital constraints due to high credit growth and largely being financed by loans from international financial institutions (“IFI’s”), Uzpromstroy bank’s bond issuance is expected to bolster its balance sheet and allow it to more sustainably grow its business, easing off of the reliance on IFI’s. Further, Uzpromstroy is only the first of several state-owned banks expected to come to the market through debt offerings, with more expected in the coming several months. Certainly, these offerings will help in attracting investor’s attention to the investment opportunities available today in Uzbekistan.

On a non-investment related note, winter has arrived in Uzbekistan and having experienced Tashkent’s first snow, below is a picture I took of the Amir Temur Museum located in the City Centre, blanketed in snow.

Amir Temur Museum blanketed in fresh snow

AUF Blog 2019 11 30 Update 01

AFC Uzbekistan Tour 2020

Asia Frontier Capital will be hosting its second investment tour to Uzbekistan from 29th April to 2nd May 2020. We will be taking a small group of investors to experience this wonderful country and better understand the economic and social transformation taking place on the ground today. The Uzbekistan Investor Tour will start in Tashkent on 29th April 2020, with a welcome dinner at City Grill. On 30th April and 1st May we will be conducting site and boardroom meetings with publicly listed companies in the sectors of chemicals, pharmaceuticals and financial services to understand how these businesses operate in the local capital market environment on a daily basis. For the final part of the trip, on 2nd May we will visit the ancient Silk Road City of Samarkand for the day, taking the Afrosiab bullet train around trip. This will give us the chance to absorb the unique beauty of Uzbekistan and see one of the many wonders that will attract millions of new tourists to the country in the coming years.

If you would like to join us on this tour please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. and we will provide you further information.


For further viewing here are some interesting, relevant news links related to Uzbekistan: 

Uzbekistan may list large energy and mining firms

Privatization wave to propel Uzbekistan’s capital markets overhaul

Uzbekistan opens up to foreign investment, spurring rivalry with Kazakhstan



The next cutoff date for new subscriptions will be 23rd December 2019. If you would like any assistance with the subscription process please get in touch with us at This email address is being protected from spambots. You need JavaScript enabled to view it.


Best regards,

Scott Osheroff

CIO AFC Uzbekistan Fund