Opportunity in Uzbekistan

Published on
August 26th, 2019
23 minutes

Opportunity in Uzbekistan

The Expert View ·
Featuring Kiyan Zandiyeh

Published on: August 26th, 2019 • Duration: 23 minutes

Kiyan Zandiyeh, CEO of Sturgeon Capital, joins Real Vision to talk about the opportunity he sees in what has been the sixth-fastest growing economy in the world over the past decade. With attractive demographics, rich natural resources, and recent economic liberalization, Zandiyeh makes the case that Uzbekistan has become an attractive place for international investors. He adds that Uzbekistan could provide the "best place to hide" if global recession strikes. Zandiyeh also sheds light on the potential risks, and suggests how to gain exposure. Filmed August 7, 2019 in London.



  • AB
    Andy B.
    30 August 2019 @ 14:09
    Great interview. Always a pleasure to watch Kiyan on RV. It would be interesting to see a presentation on frontier investments as an asset class with past returns by country both in local and $ currency. I'm always sceptical about total returns as real growth is not necessarily captured by financial assets and currency devaluation is always a major threat. It would be good also to frame the investment case in relation to other countries that underwent the same kind of development in the past.
    • KP
      Krishna P.
      22 July 2020 @ 13:58
      I like that
  • ME
    Michael E.
    16 September 2019 @ 07:50
    Kiyan is a great man with a lots of passion. We met a few times. With that being said, we are here to make $$$$. These are the rules that I follow: 1. Long term investing not short term, maybe medium term with 5%, 95% long term. 2. Never ever invest in countries dictatorship regimes. CCP, Mafia Putin, all Middle East. You own nothing, as long as you are useful to the ruling party, they let you to make $$$, otherwise they confiscates everything. This part is very hard to swallow born & raised in western democracies or Japan. 3. Islam culture in Middle East is WIN/LOSE. THEY MUST WIN AT THE END. 4. NO ONE CAN PLAY HEAD GAMES LIKE CCP, PUTIN GANG AND MIDDLE EAST DICTATORS. IF THEY DONT CARE ABOUT THEIR OWN PEOPLE, THEY WILL CARE ABOUT YOU!!!!!!
  • LL
    Lo L.
    26 August 2019 @ 16:08
    Please read chapters aloud, easier while driving
    • AW
      Aaron W.
      15 September 2019 @ 02:32
  • AW
    Aaron W.
    15 September 2019 @ 02:24
    Excellent! Big fan of these country profiles. Would love to see more of these!
  • IS
    Ivo S.
    6 September 2019 @ 16:08
    I've moved to the Republic of Georgia about 2 years ago after I was simply blown away by the country during a two-week vacation and after having learned about their tax system. a) Coming from Germany, the regulatory ease is striking. I can have a company registered and fully operable with have a bank account within 24h. b) The tax rate for small entrepreneurs is just 1% of revenue for the first 150 000 USD or 15% for Corporations. However, taxes are only due upon profit distribution, which means you pay little or no taxes, unless you decide that you can afford to do so. c) Foreign sourced income is not taxed, making it extremely attractive for high-earning foreign individuals to move here. Within 2 years, I've started 3 businesses, all of which are cashflow positive. Needless to say, not having to pay taxes on any capital gains and the insanely low cost of living provides massive working capital to leverage. My broker in Georgia gave me a heads up over UZ last year. They have been extensively covering Uzbekistan for several years. Similar to Kiyan, he saw financials outperforming (imagine UZ banks can afford to pay 5-7% of interest on USD deposits). Just weeks later some of my friends at the EBRD, opened an office there. Infrastructure spending incoming... From my experience in Georgia, I do share the worries that some voiced regarding liquidity and accessibility though. So if you do invest in the region, you should do it for the long-term and be wary about the people you do business with, since very few can actually deliver what they say. Still, I am sure there are massive opportunities to discover if you do meet the right people there. I'm very much looking forward to traveling to UZ later this year and get some feel for the world on the ground. Thanks for the interview!
  • JJ
    John J.
    5 September 2019 @ 11:53
    I like the Stans, travel there regularly and am exploring some investment opportunities. Unfortunately I still can’t get my head around a principle one of my old London based private equity mentors told me - “never back a banker, let alone an investment banker” 🤷‍♂️
  • ME
    Michael E.
    31 August 2019 @ 10:26
    Kiyan, What do you think about Azerbaijan????
  • WB
    William B.
    31 August 2019 @ 02:16
    Sorry, but I'm not going to travel to Uzbekistan to invest. How many RealVison members will? If the number is less than 20, then this interview is irrelevant.
  • TT
    Trenton T.
    29 August 2019 @ 14:13
    Very interesting. I've been involved with Uzbek since 2000 via automotive assembly JV in Andijan. Met some very hard-working Uzbek people, who were trained at our facility in South Korea. A very Russian style red, green, yellow and white Uzbek carpet resides in my home office as a momento, all things considered, of those happy times. Also have a former Brit co-worker whose Uzbek oil company was taken down by Russian gents in black leather jackets with custom interior pocket holsters after they bought the Uzbek bank that was the senior secured to the oil company. Very excited for the Uzbek people, who deserve a shot at prosperity after enduring the backward and kleptocratic puppet administration of Islam Kharimov for so many years, and constant paranoia and brutality around radicals leaking over the border from the neighboring buddha-destroying/fugitive harboring Stans.
  • VK
    Viresh K.
    28 August 2019 @ 22:04
    Nice video Kiyan
  • ME
    Michael E.
    28 August 2019 @ 18:52
    Congratulations to Kiyan to be a CEO. Good luck. Mike
  • MC
    Michael C.
    28 August 2019 @ 04:38
    Interesting discussion but not sure I would be that keen on buying into a fast growing EM financial system (50%+ loan growth should probably be a red flag not an opportunity). That said the economic potential sounds significant if you can find a way in.
  • SC
    Sean C.
    27 August 2019 @ 14:26
    Very interesting, but unless you have feet on the ground locally, virtually zero actionable information. Still I learnt something today. Nice to see Kiyan replying to so many comments with detailed replies.
  • FM
    Floyd M.
    27 August 2019 @ 00:34
    Sturgeon was going to have an exchange traded fund regarding Uzbekistan. What changed your thinking on that?
    • KZ
      Kiyan Z. | Contributor
      27 August 2019 @ 09:13
      Hi Floyd, we were previously aiming to list a closed end fund on the London Stock Exchange dedicated to Uzbekistan, however ultimately realised it would be the wrong structure, as investors are rightly very cautious of potential discounts to NAV, which whilst one could make best endeavours to manage, would ultimately distract from investment work. Instead we’re launching a traditional private equity structure, which we’re hoping to launch by mid November. Best, Kiyan
  • IZ
    Ignacio Z.
    26 August 2019 @ 20:35
    So, if someone is educated in Europe, and has experience, as an investment banker, then he's an honest and competent minister by proxy. These facts ---> https://www.heritage.org/index/country/azerbaijan - about economic freedom, don't match the narrative. And of course: revenue to the government is increasing..... with the "benevolent" measures taken by bureacrats. Is this a good news for an economy? What am I missing here?
    • KZ
      Kiyan Z. | Contributor
      27 August 2019 @ 09:08
      Ignacio, agree - by no means does the profile of a western educated ex banker, guarantee a minister to be competent and honest, and as you pointed out, there are instances where this has not been the case. With Uzbekistan, the point I was trying to make was that, in principal it’s a step in the right direction to fire the previous ministers, which had a track record of incompetence, and making best efforts to replace them with technocrats. So far they are doing a good job (e.g. the successful eurobond issuance/liberalising fx). Nevertheless, as has been seen with other countries, this could change, and is a risk an investor has to be conscious of. Again on revenue increasing to government, this is a function of tax reforms, where previously you had approximately 50% of the country as part of the black economy, and now because of lower and fewer taxes to pay, the black economy moving to the formal economy. If the government was doing this in parallel with increasing its scope, it would be worrying. Instead, they are closing unnecessary ministries and privatising nearly all state assets, in the aim of reducing the influence of government within the economy. Completely understand scepticism though, given how some other countries have turned out, attempting similar transitions. Best, Kiyan
  • mw
    mathias w.
    26 August 2019 @ 21:03
    All the former "Stan" countries have great prospects..on paper at least. The investment universe is way too small, there is no liquidity and corporate governance is a joke. Sturgeon Capital's long term track record is appalling, their funds investing in Central Asia has made no money for their investors since inception back in 2008.
    • KZ
      Kiyan Z. | Contributor
      27 August 2019 @ 08:32
      1. You’re right, the public markets in Central Asia, are illiquid, particularly in Uzbekistan, as mentioned in the interview. It is why our Uzbek fund, is a private equity one 2. We don’t have a fund with an inception of 2008, so not sure what performance you’re talking about 3. I assume your comment is in no way linked to the shareholders of the Central Asia fund YOU managed, being so happy with it’s performance that they asked us to take over, resulting in you no longer being PM?
  • PG
    Philippe G.
    26 August 2019 @ 23:25
    Interesting and compelling thesis. Thanks!
  • BS
    Ben S.
    26 August 2019 @ 16:03
    Don't want to be too nitty-gritty because I like the thesis in general - but the GDP per capita numbers seem quite odd, or the CIA is WAY off. CIA WF shows USD 6.900 for Uzbekistan, not 12000. Georgia USD 10700 vs. 4500, Kazakhstan USD 26300 vs 9000? https://www.cia.gov/library/publications/the-world-factbook/fields/211rank.html#UZ Sure, the CIA WF are 2017 est. numbers, but can you really be off by a factor of 3? Given these numbers, it is rather the opposite of the narrative, no?
    • BS
      Ben S.
      26 August 2019 @ 16:05
      Last comment: Of course the CIA WF numbers are PPP and not straight $, but PPP is the only real comparable metric to compare economics
    • KZ
      Kiyan Z. | Contributor
      26 August 2019 @ 17:27
      Ben, you’re correct, I was using current $ figures as opposed to PPP - apologies for not specifying/agreed PPP is a better comparison. To clarify I mentioned on a current $ basis, a GDP per capita of $1,200 not $12,000. The broader point I was trying to make with the comparison was that given the population differential (Uzbekistan at 32.3m vs Georgia’s at 3.7m), better demographics, far lower debt base (as a % of GDP) and more significant resource base (which remains under utilised), the probability that Uzbekistan can catch up/surpass Georgia in terms of GDP per capita (even on a PPP basis) is high, which as an investor means your allocating capital with the ‘wind behind your back’. If they can get to 50% of Kazakhstan’s GDP per capita (again on a PPP basis), which is not particularly unlikely, again the country has an attractive growth profile. Thank you for your comment! Kiyan
    • BS
      Ben S.
      26 August 2019 @ 18:53
      Damn you’re so right! Rewatched the video and realised I my mistake, slightly embarrassing. Sorry!
  • DD
    Daniel D.
    26 August 2019 @ 18:22
    Very interesting and intelligently articulated opportunity! Thank you Kiyan and RV.
  • BV
    Bas V.
    26 August 2019 @ 17:32
    Curious to know which investment bank he'd recommend in Uzbekistan. Great opportunity for small-medium sized investors to experiment.
    • KZ
      Kiyan Z. | Contributor
      26 August 2019 @ 17:53
      Bas, would be more than happy to recommend a few - you can reach me on kz@sturgeoncapital.com All the Best, Kiyan
  • PF
    Patrick F.
    26 August 2019 @ 17:30
    Great interview! More frontier market interviews please!
    • AF
      Andre F.
      26 August 2019 @ 17:38
      "More frontier market interviews." Yes, I emphatically agree.
  • ag
    anthony g.
    26 August 2019 @ 16:50
    Thanks - interesting.
  • SB
    Stephen B.
    26 August 2019 @ 14:59
    As much as i found this interesting, it reminded me that RV have done nothing recently (inside the last year) on China, India, Russia and Brazil. With so much going on in the world, we need an update (especially on China - where is Simon Hunt?).
  • SS
    S S.
    26 August 2019 @ 13:51
    Next Episode - Opportunity in Zimbabwe
    • SB
      Stephen B.
      26 August 2019 @ 14:33
      That's unfair. There will always be good EM and bad EM. Good on RV in high lighting some of the less traveled parts of the globe.
  • SG
    Sven G.
    26 August 2019 @ 11:50
    very interesting, thanks Kiyan.
  • SS
    Shanthi S.
    26 August 2019 @ 11:31
    Great! Very interesting.
  • DK
    David K.
    26 August 2019 @ 11:28
    Attractive idea, well presented. Thanks!
  • PB
    Pieter B.
    26 August 2019 @ 10:14
    Awesome presentation! I did a business trip to Uzbekistan two years ago and loved it! Great changes happening!
  • hg
    henry g.
    26 August 2019 @ 09:57
    The sound keeps going in and out for me