Page 46 - bneMag Dec22

46 I Special Report bne December 2022
INTERVIEW
Orient group investing into Uzbekistan's growing population and investment- friendly climate
Ben Aris in Tashkent
Uzbekistan’s Orient Group has emerged as one of the largest multi-sector conglomerates in the country, with interests in real estate, banking, retail and agriculture among other things, making it one of the three largest corporations in Uzbekistan.
The company was founded in 1998
and is riding the wave of reform as the country opens up and is actively taking advantage of the new pro-business environment as the economy of
Central Asia’s most populous country finally takes off.
Today growth is accelerating in a complicated geopolitical environment as the war in Ukraine spills over to affect Uzbekistan. Like many other countries in the Commonwealth of Independent States (CIS), Uzbekistan has taken in hundreds of thousands of refugees fleeing Putin’s war, including at least 20,000 IT professionals that have made their home at the country’s new IT park.
Uzbekistan’s growth had already attracted a lot of Russian capital a year ago, which is still coming, as Tashkent sits on the international sanctions regime fence.
The start of Russia's special military operation in Ukraine was a window of opportunity for business in Uzbekistan as capital that is trying to leave
Russia and looking for opportunities
to diversify and there are not many countries where this capital is welcome.
Uzbekistan is one of those countries, but it has to be careful not to fall foul of US secondary sanctions. Amongst the most attractive sectors for inbound Russian investors looking for a profitable safe haven to park their money is real estate,
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which remains underdeveloped and offers strong returns.
“Before 2017 there was almost no modern real estate in Uzbekistan,” acting CEO of Orient Group Andrey Maslov told bne IntelliNews in an exclusive interview in Tashkent.. “There was a big gap and a significant demand. And real estate is supported by the strong population growth.”
Traditionally in a family with four sons, the three older brothers are expected to buy their own homes, but the youngest inherits the family home, although he is expected to help finance the purchase of the other houses. Migrant workers are also expected to send home the majority of their pay to help the family, unless they are married, all of which adds to the demand for housing.
Some 300,000 refugees have fled from Russia to Uzbekistan and many are buying apartments, giving the market a bump. Maslov says that sales of housing
Tapping in the international
capital markets
The Russian capital remains an important source of funding, but companies like the Orient Group are getting ready to tap the international market. The group has no external debt, but in 2021 issued its first corporate bonds worth UZS126bn ($11mn) – the largest issue of corporate bonds ever.
However, next year the group wants to start tapping the international market. Several famous international investment banks already have representative offices in Tashkent, but currently they are focused on selling big international corporate bonds to the country’s blue chips and not debt financing or syndicated loans for the leading corporate players.
In preparation for unlocking access to the international capital markets, in 2021 Orient Group has introduced IFRS accounts for all its holdings, the first results of which will be released
“Before 2017 there was almost no modern real estate in Uzbekistan,” There was a big gap and a significant demand”
are up by 30-40% in just the last two months, which he suspects is largely due to the new Russian residents.
“I’m not sure, as it is hard to separate out what increase is due to the arriving Russians and what is due the organic growth of the domestic market,” says Maslov. “But the new money is fuelling growth in the sector.”
in February 2023, and it will probably organise a syndicated loan thereafter.
“Initially the plan was to raise a syndicated loan from Russia’s leading banks but after this spring we abandoned that plan,” says Maslov. “But we are already in talks with the leading global investment banks and plan to do this maybe next year.”