Thread by @CulperResearch

1) We are short $KSPI, the operator of the largest payment network and second largest bank in Kazakhstan. Our full report is now available on our website. Kaspi.kz
culperresearch.com

2) Kaspi IPO'd in the US in January 2024, telling investors and regulators that it has "no exposure to Russia or Russian businesses." However, we believe Russia has in fact been a material contributor to $KSPI's performance since Russia's February 2022 invasion of Ukraine.

3) Our research further unmasks $KSPI's shadowy dealmaking: which exposes not only Kaspi's capacity for self-dealing and related party concerns, but exposes the Company's vast, longstanding ties to sanctioned oligarchs, Russian mobsters, and more...

4) In February 2022, Russia invaded Ukraine, and Western sanctions followed. Millions fled to neighboring Kazakhstan to open bank accounts and payment cards at non-sanctioned banks. While Kaz's largest bank Halyk stepped back, we believe $KSPI welcomed Russians in.

5) $KSPI is constantly referred to as the bank of choice for Russians looking to get money out of the country. Reviews call Kaspi “the only bank that issues cards to Russians" wherein users can get a “card in 10 minutes” as Kaspi reps are "already trained on Russian clients.”

6) Others call $KSPI “a miracle” post-sanctions, yet more note the “large wave of people coming from Russia.” $KSPI cannot claim ignorance; the Company even replies to reviews from Russians to thank "our beloved customers" and instruct them on how to exchange rubles for tenge.

7) Kazakhstan central bank data reveals that from Jan 2022 (pre-invasion) to Q2 24, non-resident bank liabilities (i.e., deposits) in Kazakh banks have ballooned by an alarming 338%, from 743B KZT pre-invasion to 3.3T KZT. We believe $KSPI took significant share of these inflows.

8) $KSPI again baldly claims to US investors and regulators that is has ZERO exposure to Russia. Illustratively, if $KSPI captured half of non-resident inflows, then 29% of $KSPI's deposits, and nearly half of growth since 2022 can be explained by "non-residents" i.e., Russians.

9) Then there's the smoking gun: in April 2024, Kairat Satybaldy - former $KSPI 30% owner, nephew of Nazarbayev, and founder of Iran-backed Ak-Orda - pled guilty to laundering hundreds of millions via Kaspi bank accounts and using the proceeds to buy properties in Russia.

10) $KSPI claims it doesn't work with Russian banks, but the Company's very first correspondent bank is a Moscow branch of Austria-based Raiffeisenbank. In recent months, Raiffeissenbank disclosed money laundering investigations from both the US's OFAC and Austrian regulators.

11) $KSPI now risks being affected by secondary sanctions. Three of Russia's most popular cross-border transfer platforms have faced fallout in 2024: QIWI's banking licensed was revoked, while the US sanctioned both Russia's Mir card system and Golden Crown / Korona remittances.

12) There is also predecent for US exchanges taking action. In December 2022, NASDAQ halted Pingtan Marine (PME) after its Chairman and CEO were sanctioned by OFAC and @AureliusValue revealed illegal fishing activities and labor abuse. Shares were eventually delisted.

@AureliusValue 13) $KSPI's relationships with and exposure to Russia span not only the Company's banking segment, but seemingly every aspect of its business, including its marketplace, deliveries, payments, and deal making.

@AureliusValue 14) Our research shows the $KSPI marketplace remains open to Russian buyers, sellers, and suppliers. We reviewed Telegram groups of Kaspi sellers sharing tips on how to find Russian suppliers, send shipments to Russia, and pay Russian invoices using Kaspi Pay.

@AureliusValue 15) Numerous made-in-Russia goods are sold on $KSPI's marketplace, including jewelry; we found hundreds of thousands of listings that mention Russia. One Russian seller on the marketplace even shows an account at the sanctioned VTB Bank.

@AureliusValue 16) In May 2024, $KSPI partnered with Russian self-checkout operator Smartix. This came less than a month after $KSPI formed what looks like a similar deal with AliPay+. Yet while $KSPI issued a PR for the AliPay deal, it never PR'ed or even disclosed the deal in Russia.

@AureliusValue 17) Similarly, a former $KSPI employee says the Company partners with Russia's for marketplace and grocery deliveries. In 2022, Estonia banned , citing concerns that user data was being shared with the Kremlin. Yandex.Taxi
Yandex.Taxi

@AureliusValue 18) $KSPI's Postomat delivery lockers, which now fill over 50% of orders, are imported from a Russian manufacturer, Techline. $KSPI even uses a Russian PR agency "Yes Context", whose entire client list consists of Russian or Russian state assets... and then Kaspi.

@AureliusValue 19) In addition to our concerns of $KSPI's Russia disclosures, we find the Company 's M&A history and choice of business partners rife with issues. We detail at least 4 deals that reek of self-dealing, raise related party concerns, and tie the Company to bad actors.

@AureliusValue 20) In February 2023, $KSPI formed a $155M JV with Magnum Cash & Carry. It appears to be run by Chairman Kim's daughter, despite no disclosures of such in Kaspi's SEC filings. Magnum is also tied to Kenes Rakishev, former founder of disgraced NETE (now $MULN).

@AureliusValue 21) In October 2021, $KSPI acquired Portmone, which was owned by Cyprus and Ukrainian shells tied to infamous law firm Vassiliades & Co, which has long been considered a front for sanctioned Russian oligarchs and mobsters. Vassiliades is now wanted in Russia for money laundering.

22) $KSPI tried to launch Portmone as a payments service in Ukraine, but its bank partner, ConcordBank, had its licensed revoked in August 2023 for failing to prevent money laundering and terrorist financing. Today, $KSPI says it hopes to re-enter Ukraine when conditions stabilize.

@AureliusValue 24) In September 2019, $KSPI bought 3 classified ads websites from its own CEO Lomtadze for 84x revenues. Lomtadze had purchased the websites just 15 months earlier. Estonian filings show the websites held common property of just 2,500 euro, represented by 5 MacBook Pro laptops.

@AureliusValue 24) $KSPI rationalized the acquisition as "an expansion of our addressable market" into Azerbaijan, but today, $KSPI Azerbaijan revenues remain miniscule at 0.2% of 2023 revenues, showcasing $KSPI's inability to expand meaningfully outside of Kazakhstan.

@AureliusValue 25) In August 2015, $KSPI Chairman Kim purchased ALSECO, a centralized bill pay platform, from a secretive Swiss entity and from real estate oligarch Kairat Boranbayev. In March 2023, Boranbayev was sentenced to 8 years in prison for tax evasion and embezzlement.

26) Alseco lists $KSPI as a partner bank, while $KSPI Deputy Chairman Yuri Didenko was reportedly Chairman of Alseco since 2015. Despite these entanglements, $KSPI never once mentions Alseco in any of its SEC filings, raising further related party concerns.

27) $KSPI thrived in Nazarbayev's kleptocracy. Look no further than the Company's longstanding relationship with Kairat Satybaldy, who as noted was imprisoned for money laundering via $KSPI accounts. The saga of Satybaldy, Kim, and Andrey Derkunskiy is also illuminating...

28) Andrey Derkunskiy was an early $KSPI shareholder who alleged that Chairman Kim's 30% stake in Kaspi in fact belonged to Satybaldy. Derkunskiy was imprisoned on extortion allegations, then found dead in his cell, ruled a suicide despite his cellmate claiming he was murdered.

29) 3 years after Derkunskiy's death, however, Kairat Satybaldy indeed appeared as a 30% $KSPI shareholder. He then disappeared just weeks ahead of $KSPI's London IPO announcement. Experts speculated that the IPO would have been unpalatable if Satybaldy was named on the register.

30) Satybaldy said he sold his stake in $KSPI because he invests for 3 years on average but this seems highly irregular - he held a stake in Kazakhstelecom for 6 years, until it was forfeited. If Satybaldy had held his stake in $KSPI, he'd be the richest man in Kazakhstan today.

31) Notwithstanding our laundry list of concerns, we find $KSPI wildly overvalued. US investors have lost context: Kazakhstan has high and erratic inflation, 13.4% 10-year rates, and GDP/capita of just $13,137. Kazakh banking peers trade at 2-3x EPS.

32/32) We also find $KSPI wildly overvalued vs. "Super App" peers, at 2-4x peer-level valuations on a per-user basis. We are short $KSPI and think shares are headed lower.