Kazakh credit crunch good for equity deals -bankers

By Olzhas Auyezov

ALMATY, March 28 (Reuters) - The credit crunch that has slowed down Kazakhstan's stellar economic growth and raised concerns about the stability of its financial system has also created good opportunities for equity investors, bankers say.

Most Kazakh companies have traditionally relied on bank borrowing and bonds for their funding needs, unwilling to share control and disclose more information about themselves.

But Magzhan Auezov, Managing Director of Kazakhstan's largest bank Kazkommerts, said this was changing as loans have become too expensive, and the focus changes more to equity finance.

The onset last year of the global liquidity squeeze hit banks in the Central Asian state hard after years of aggressive foreign borrowing and rapid credit expansion. It also crippled the construction sector that had depended on bank loans.

The chilling effect of the credit crunch is now affecting the wider economy as many businesses, especially smaller ones, struggle to secure financing at acceptable rates.

But local and foreign bankers say this has created fertile ground for the development of another form of financing.

"I think now is the time to look at Kazakh equity," Andre Kuusvek, the European Bank for Reconstruction and Development's Kazakhstan country director, told an investment conference on Friday. "The asset prices are being adjusted."

The devaluation of Kazakh assets is creating opportunities for all kinds of institutions from large foreign strategic investors to small domestic private equity houses, he said.