Investing in the Future – Despite a Crisis

Speeches Shim

Friday, April 2, 2021
Kubanych Serkebaev, Director of the Barkad LLC

The economic crisis caused by the COVID-19 pandemic has had a significant impact on the world economy and global markets. Companies are looking for opportunities to ensure the financial stability of their businesses, while investors are looking for low-risk assets. The crisis and resulting uncertainty has hit the Kyrgyz economy particularly hard – many companies have been compelled to reduce their activities, and some were forced to close their doors. Yet despite the negative economic environment, a few companies have chosen this moment to make a different move – grow. Barkad LLC is one such company, not only defying the odds of economic crises, but also thriving in the process.

Barkad LLC, a producer of 150 different frozen food products and sausages, became the first company in Kyrgyzstan’s food processing industry to take advantage of the capital market to finance a new investment project. The company, founded in 2002, has a strong position in the domestic market.

In 2019, Barkad launched a new construction project in the village of Kenesh in the Chui region to build a processing plant for the production of fresh, chilled, and frozen meats. Construction is currently in its final stages and processing equipment has already been purchased.

“Launch of the meat processing plant was scheduled for October 2020, and we decided to attract additional funding through the stock market for a quick launch,” recalls Barkad general director Kubanych Serkebaev. “The bond issue was not an easy decision in the context of the quarantine declared as a result of the COVID-19 pandemic, which ultimately affected the construction timeframe. At the same time, I believe that the company should adhere to its long-term goals and benefit even in times of crisis.”

According to Kubanych, the company learned from the financial company, Senti, that the USAID Future Growth Initiative is offering technical support and co-financing the costs associated with going public on the stock market.

“After we signed a Memorandum of Understanding with USAID’s Future Growth Initiative, we contracted the consulting company IPF to prepare the documents required for the listing procedure, memorandum, determining credit parameters, and developing marketing activities for our initial public offering with an advertising campaign,” says Kubanych.

Barkad’s initial public offering was held at the Kyrgyz Stock Exchange, on October 30, 2020. The opening ceremony of where Kyrgyz Stock Exchange President Medet Nazaraliev declared that the company qualified as a ‘blue chip’ listing, signaling a high degree of financial reliability. A number of requirements must be met to achieve a ‘blue chip’ classification: equity capital totaling at least 100 million soms (around $1.17 million USD), initial registration no earlier than three years prior to entering the stock exchange and demonstrated financial sustainability over the previous three-year period.

Thanks to technical support from USAID, Barkad has sold 77 percent of the planned volume of 90 million soms to date, and plans to sell all of its stock by April 2021, once construction of the meat processing plant is completed. The launch of the new meat processing plant in Kenesh village is expected to create nearly 200 jobs and increase sales by 100 percent.

“We had some doubts at the very beginning of the project, but in the end we made the right decision,” Kubanych declares. “The entry of Barkad LLC into the stock market will undoubtedly give a positive signal to Kyrgyzstan’s business community. With the support of USAID, the stock market has become even more attractive and accessible!”

Last updated: May 11, 2021

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