Kazakhstan’s most popular mobile app Kaspi.kz, of which Lomtadze is the co-founder, was admitted to the London Stock Exchange in late October, achieving a market capitalization of $6.5 billion on its first day of conditional trading through a dual listing on the London Stock Exchange and Astana International Exchange.
Mikheil Lomtadze can’t be the only Georgian who can remember going out with his father during hard times to buy and sell goods to raise money for the family budget. He says he was the one to do the selling—he even enjoyed it.
However, not that many teenage Georgian traders have gone on to launch a $6.5 billion company on the London Stock Exchange, becoming a multi-billionaire at age 45. That is what Lomtadze did in October with Kaspi.kz, Kazakhstan’s top fintech group, of which he is founder and chairman.
The company’s IPO, with the sale of 13 percent of the shares raising 900 million USD, was one of the largest-ever fintech floats on a European stock exchange. Kaspi.kz is at the forefront of digitalization in Kazakhstan. Unknown before it burst on the London Stock Market, it operates an ecosystem composed of three market-leading platforms: payments, marketplace and fintech, which are accessible via the Kaspi.kz Super App—the most popular mobile app in Kazakhstan.
Kaspi.kz earned $515 million in net income on $1.3 billion in revenue last year, and its pace of growth this year has quickened, helped by Covid-19 and new products. It has around a third of the consumer loan business—the largest market share in Kazakhstan—and 66 percent of digital payment volumes.
Announcing Kaspi.kz’s 2020 Q3 results in mid-November, Lomtadze said that active users were up 68 percent over a year ago to reach 8.5 million, revenue was up by 32 percent and net income by 50 percent year-over-year, with the net income margin reaching 42.5 percent year-over-year.
That highly positive trend looks set to continue, Mikheil Lomtadze told investors: “Looking into 2021 we will continually add new and innovative digital products and services to our Kaspi.kz Super App. Kaspi Travel will be launched imminently and we’re rapidly rolling out Kaspi Pay and Kaspi QR, our QR contactless payments solution.”
Kaspi is also diversifying geographically, acquiring platforms in Azerbaijan (which has the fourth largest economy in the CIS and high mobile penetration) and Estonia. Company press releases refer to opportunities “across Central Asia and the Caucasus.”
International ratings agency Moody’s, liking the look of Kaspi.kz and its management, recently upped its rating of Kaspi.kz. The scope for growth is huge, states Moody’s in its report, since the 74 million in Central Asia are mainly unbanked and are highly distrustful of the formal banking structure. Consumer finance accounted for only 6.7 percent of Kazakh GDP in 2019 compared to 8.7 percent in Turkey and 23.7 percent in China.
On growth and Moody’s improved outlook, Lomtadze commented: “As we continue to develop new innovative products and services and play a major role in Kazakhstan’s digital transformation, we expect our relevance to consumers and merchants to increase further, with Kaspi.kz continuing to see strong revenue and profitability growth into the medium-term.”
International investors never expected to see a company of this caliber emerging from Kazakhstan, an emerging market which has been priming investors for a deluge of old-world privatizations from among its mining, aviation and telecommunications sectors. For international emerging-market investors looking for something cheaper than the U.S.’s NASDAQ market, and which promised that rare reward, a dividend, Christmas has come early.
The first clue hinting of its future success was that Kaspi.kz had been mentored by one of the oldest and internationally most-respected funds in the CIS region, Moscow-based Baring Vostok, which has a strong record in fintech and technology, according to Eurasia consultants, Marco-Advisory. It was also whereLomtadze spent much of his time. Kaspi was a smallish, basic Kazakh bank catering mainly to a mix of small- to mid-sized companies looking for loans. Then, in 2006 Baring Vostok acquired a majority stake and installed Lomtadze as CEO.
Lomtadze had arrived at Baring Vostok after building a career in Tbilisi. He had started working and consulting on projects very early. While still a student at the European School of Management, he was hired to join Gia Bazgadze and Konstantine Rizhinashvilil’s Georgian Consulting Group (now part of international accounting and consultancy group Ernst & Young) at age 20 and subsequently took charge of its auditing business.
Lomtadze then spent time studying for an MBA at Harvard, graduating in the class of 2002, before moving on to Baring Vostok in Russia, where he quickly became a partner. There he managed investments in financial technology companies, motor leasing and banking across the region from board positions—all sectors in which he is now developing e-businesses. In 2006, he moved to Kaspi and took it the fintech route (Kaspi.kz now owns Kaspi Bank.)
Lomtadze comes across, say former colleagues at Ernst & Young, as very determined, exceptionally hard-working, well organized and always on the quest for new ideas, amiable and soft-spoken. But as his track record shows, Lomtadze is also extremely tough. Once at Kaspi, as he told Euromoney magazine, he “basically fired everybody” and rebuilt the management team from scratch. Lomtadze had working with him a fellow director, and now chairman, Kazakh retailer Vyacheslav Kim, who had invested in Kaspi in the early stages.
It was Kim who was responsible for Lomtadze’s large stake in Kaspi.kz. Having bought out the 30 percent owned by Kazakh President Nursultan Nazarbayev’s nephew in 2018, removing political links, as Bloomberg suggests, in preparation for the IPO, Kim gave 20 percent to Lomtadze as a “non-cash consideration” to boost his holding. This has never been expanded on, says Bloomberg, but it made him one of the company’s largest shareholders alongside Kim and Baring Vostok. Thus, he had even more incentive to grow Kaspi.kz, in which he still has, even post-directors’ sales at the IPO, around 25 percent of shares.
The board’s expansionary approach, as he has stated to Euromoney and has repeated on Kaspi.kz online sites, is: “We have a very clear goal to build our competitive advantage on speed of providing products and services, and constant disruption through innovation. You can achieve this only by being data-driven and technically advanced. We felt that would be our biggest source of competitive advantage in the years to come.”
Lomtadze’s management success with Kaspi.kz has won recognition and he has repeatedly been applauded in local and international surveys, such as those by international consultants PwC, as the country’s leading or the best financier, investor, manager and business leader. PwC cited his “adaptability, strategic vision and customer focus.”
Lomtadze has won respect, too, for his philanthropy. Apart from support for WWII veterans, he has led contributions and campaigns for children’s medical treatment equipment, children with autism, and education to increase financial literacy countrywide.
Informality seems to be his keynote, not just (visibly) in his presentations. As mentioned even in his Wikipedia entry, he “constantly appears … in dark clothes and red sneakers.” Though never, anywhere, is there any reference to non-work interests.
What’s next? Lomtadze remains focused on what seems to be his adopted country. To InBusiness.KZ he said: “I have a simple goal—for Kaspi.kz and Kazakhstan to appear on the innovative map of the world.”
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