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The company is going public for the second time and is offering its bonds to investors.
In 2021, the company already issued its securities and attracted market investment for business development. In the summer of 2024, it plans to issue new bonds on the KASE, which will result in the company’s significant growth and expansion of its core business. Gennady Kim, Chairman of the Board of Seif-Lombard LLC, discussed this and much more.
The history of the Seif-Lombard Group began with the financial crisis of 2008. We had just received a license from the regulator to open a new bank, Masterbank. I was Deputy Chairman of the Management Board, and we were full of inspiration and enthusiasm for the work. But the crisis ruined all our plans.
International development banks, which were supposed to be our partners, blocked access to investment. Collateral, which had previously been liquid and reliable, depreciated at a catastrophic rate. The quality of all banks’ loan portfolios declined, dollar liabilities soared, banks rapidly scaled back their business, revoked independent limits from branches, closed branches, and laid off staff.
As top managers, we clearly realized that the banking industry was on the brink of a large-scale, protracted crisis. Against the backdrop of this collapse, the shareholder decided to voluntarily surrender his banking license and simultaneously set the goal of building a stress-resistant financial business. Thus, Seif-Lombard was born.
Why did you decide to enter this particular type of business? And why did it seem “stress-resistant” to you at that time?
— The decision to open a pawnshop wasn’t immediate. After carefully examining the market, we realized that gold is a natural hedge against crises. It’s highly liquid, doesn’t depreciate, isn’t affected by devaluation, is disregarded by banks as collateral, and is readily available to the public. Micro and small businesses were in dire need of working capital, but they weren’t getting it from banks. We quickly realized we could fill this niche.
Having answered the questions of “when” and “what” to sell, all that remained was to figure out “where.” It was clear that banks were reducing their presence in regions where demand for loans is always high, so we opened there first. We developed gradually, evolutionarily, carefully exploring potential growth areas.
Where is your company today? What are its financial indicators and competitive advantages?
— Today, it is a financial company with a crisis-resistant, time-tested business model. The group’s parent company alone has eight regional branches and one representative office, with 130 points of sale in 39 locations across Kazakhstan.
In 2023, assets increased by 10% compared to 2022, reaching 27.2 billion tenge. Equity increased by 20.5%, to 19.7 billion tenge. Total revenue increased by 31.9%, to 5.1 billion tenge. We are among the top 5 pawnshops in the National Bank’s rankings — 2nd place in terms of loan portfolio among pawnshops and 4th place in terms of assets.
Our competitive advantages:
rating from the international rating agency Fitch;
long-term audit of the company’s activities by audit firms, including Big4;
licensed regulatory oversight;
return on equity of 25%+;
low leverage (0.3% versus the permitted 8%);
adequacy of authorized capital (2.2 billion tenge versus the standard of 70 million tenge);
loan portfolio secured by gold and cars;
unique team competencies;
transparent, understandable, and recognized shareholder in the financial community;
Corporate governance with the introduction of a supervisory board, independent directors, risk management, and internal audit.
Sometimes we smile and say that we simply found ourselves in the right place at the right time. But in reality, this is the result of a rigorous search for solutions, the painstaking work of the team, and the trust of the people.
The company employs over 600 people, and they are truly a team to be proud of. I never tire of repeating that the success of a business depends, above all, on the team—on the motivation, inspiration, and professionalism of the people who believe in the company and come here every day to dedicate their energy and time to it. Many have been here since its founding, and that is very valuable to me.
Tell us how you got into this business? What did you do before?
— My career began at Bank CenterCredit in the small and medium-business lending sector. Later, I worked at Kaspiyskiy Bank, at the Russian bank Zheldorbank, then at the Eurasian Development Bank. In 2007, I was invited to Masterbank, and in 2016 I worked at RBS Kazakhstan until its sale.
You’re planning a new debt securities issue in June. What is the purpose of this issue? How do you plan to use the funds?
— The main goal of the issue, as before, is to develop the company’s core business. Today, the company has an extensive branch network, covering 130 points of sale throughout Kazakhstan, and in addition, it has several subsidiaries with their own channels. The combined capacity of the group network allows us to easily use the resulting liquidity to increase financial inclusion for the population.
Your financial group also includes five subsidiaries. Can you tell us more about them? What is their role within the group?
— The creation of subsidiaries was a logical continuation of the organic development of our business model. Their emergence served as a solution to the problems we encountered as we grew.
For example, we understood that the gold market in Kazakhstan was quite limited. Even if all Kazakhstanis who owned gold jewelry obtained loans from us, we would still not be able to scale our business tenfold. Therefore, we began analyzing other assets that could be used to provide loans to the population. This is how a new product was born: car-secured loans. Almost every second Kazakhstani has this asset, and it is a liquid and protected collateral.
We then turned our attention to the neighboring region of Uzbekistan. It’s no secret that the further south you go, the higher the demand and turnover of gold. In 2021, we decided to conduct a “reconnaissance mission” and were among the first to enter the pawnshop market in Uzbekistan. This is how our subsidiary, Seif-Lombard Uzbekistan, was born.
The market there wasn’t as developed as in Kazakhstan—at the time we received our license, there were only 28 pawnshops operating, and the law stipulated that one company could only open one branch. In 2023, legislation changed, allowing pawnshops to open branches. Taking advantage of this, we opened a second location in 2023, which reached operational breakeven by the end of the year.
The idea for another subsidiary, CashDrive MFO, arose during the pandemic and quarantine of 2020–2021. We saw a need for online lending services and began developing this division specifically in the format of online car loans.
Another subsidiary, Seif-Car, was born as a result of a decision to offer a lease-to-own service to a car that was abandoned as collateral and transferred to us for repayment. It’s a small, but straightforward, sustainable business and a popular service.
Bereke MFO is a unique financial company, founded in 1997 under the auspices of the UN to develop entrepreneurship in Kazakhstan through lending to micro and small businesses. Over its 25-year history, it has created and financed over 8,000 micro and small entrepreneurs. We acquired this company in 2022, and we plan to further develop and scale it. The company has historically collaborated with international investment funds such as Enabling Qapital, ResponsAbility, Alterfin, Incofin, Fondation Grameen Credit Agricole, and others to attract investment to Kazakhstan.
How do you envision your future development?
— None of our steps regarding the company have been random or haphazard. For example, obtaining an international rating and audit from Big4, reforming the corporate structure with the introduction of a supervisory board, independent directors, risk management units, and so on—none of this was without purpose.
Over the past 15 years, we have built a solid foundation for the next steps of our company’s development and have no intention of stopping. We continue to build a strong financial institution with crisis-resistant business models—tested by practice and time. We want to be a large, reliable partner for the government, clients, and employees.
Gennady Viktorovich, can you describe the company’s formula for success?
— There is no secret. In difficulties, find opportunities, learn new things, and dig down to the ore. Use your mind and study the successes of others, no matter what you’ve achieved. Be open to change. Struggle: if you fall, get up, always take the next step toward your goal. How much? As much as it takes. Believe in others more than they believe in themselves—they’re better and stronger, they just don’t know it yet.
However, all of the above is more of a derivative formula.
So, there’s a function, too?
— Wise books teach us: love, and everything else will follow. But love is a verb, and it suffers long. That’s where we stand!
