Nasdaq-listed shares of Kazakhstan’s fintech heavyweight Kaspi.kz dropped as much as 22.3% on September 19 after Culper Research revealed a short position, arguing in a report that the company’s claim of it having zero exposure to Russia is a "grave deception".

Kaspi, contended Culper, has "systematically misled" US investors and regulators.

As traders on the Nasdaq—where Kaspi listed in January—continued to digest the Culper report, the fintech issued a statement, reading: “In our view, the report is misleading, inaccurate and misrepresents our business.

“Being the first company from Kazakhstan to successfully list on Nasdaq has obviously raised our profile amongst short sellers. For those investors who have known us over the years, our reputation speaks for itself.”

Culper said in the introduction to its research on Kaspi: “We are short Kaspi, the operator of the largest payment network and second largest bank in Kazakhstan. We believe Kaspi has systematically misled U.S. investors and regulators in its repeated claims – especially ahead of the Company’s January 2024 NASDAQ listing – that the Company has zero exposure to Russia.

“Our research exposes this grave deception: we believe that not only do Kaspi’s relationships with Russian partners permeate every segment of its business, but that in the wake of Russia’s February 2022 invasion of Ukraine and into 2024, Russia has contributed materially to Kaspi’s reported growth.”

bne IntelliNews could not independently verify the claims in the Calper report.

Calper added: “We believe Kaspi’s premium valuation and US listing are at risk, and shares are headed lower.”

In May 2018, Kaspi floated its shares on the Kazakhstan Stock Exchange, in October 2020 on the London Stock Exchange and at the start of this year on the Nasdaq.

Kaspi CEO Mikheil Lomtadze cited “access to a wider pool of investors and another level of recognition” as the rationale for the Nasdaq listing.

Calper’s report added: “Russia has also never been mentioned in any of the Company’s 7 conference calls since Kaspi’s January 2024 IPO. Even as war rages on and Kazakhstan shares a 7,000 km border with Russia, investors remain blissfully ignorant of Kaspi’s reliance on Russia throughout numerous aspects of its business.

“We believe:

• “Kaspi, as a bank and card issuer, saw meaningful growth from Russian ‘card tourists’ and immigrants in the wake of Russia’s February 2022 invasion of Ukraine – growth that continues today.
• “Kaspi’s marketplace remains open to Russian buyers, sellers, and suppliers, who we believe make up a meaningful portion of this marketplace. Kaspi relies meaningfully on Russia-based partners throughout many aspects of its business, spanning Russian self-checkout payment operators, last-mile delivery, and even public relations. 
• “We believe Kaspi’s US IPO would have taken a substantially different tone – if it had been tenable at all – if the Company had properly disclosed the true extent of its business with Russia. We further believe the ongoing nature of Kaspi’s business ties to Russia present a material risk, especially as sanctions continue to mount against those found to be aiding Russia’s wartime economy.”

Calper concluded that even if the investor ignored multiple Russia-related and other concerns in its report, Kaspi “isn’t even a cheap stock”.

It concluded: “US-based investors have been attracted to Kaspi’s headline valuation multiples that appear cheap at first glance, but we view Kaspi as wildly overvalued, even prior to our numerous governance and disclosure concerns.

“Consider Kazakhstan’s macroeconomic backdrop: GDP per capita is just $13,137, inflation has run rampant – 8.4% in August 2024, and as high as 21.3% in 2023 – and federal rates over 14%. Kazakhstan has also been subject to internet shutdowns in the wake of violent protests, and commodity shocks as the nation’s economy relies heavily on oil and uranium.

“Kaspi’s two largest banking peers in Kazakhstan, Halyk Bank and CenterCredit, trade at a mere 3.2x earnings and 2.3x earnings, respectively. Halyk meanwhile, is over twice the size of Kaspi, by assets, and has been building out a Super App of its own which over the past 3 years has grown from 3.3 million to 8.5 million MAUs [monthly active users], and offers an expanding suite of services spanning auto insurance (launched March 2020), Travel (September 2020), Marketplace (December 2020), investment accounts, and more.”