Kazakhstan Temir Zholy, the state railway of Kazakhstan, cleared its listing hearing in Hong Kong last week and published a draft prospectus on the exchange's website on Wednesday, Nov. 11. On Thursday, Nov. 12, Kazakhstan's domestic security service said the company's chief executive and the head of its only shareholder had been arrested on suspicion of corruption, Reuters reported.

The arrests came days after the listing moved a step closer to launch. The railway, known as KTZ, is wholly owned by the sovereign wealth fund Samruk-Kazyna and plans listings in Astana, Hong Kong and London, according to Reuters. Its share sale has not been launched, and the company has not announced a delay, The Times of Central Asia reported on Friday.

KTZ is the most recent entry, dated Nov. 11, on ETNet's list of companies that have passed a hearing without yet setting a timetable.

What the Hong Kong filing shows

The post-hearing information pack names China International Capital Corporation as sole sponsor. Offer size, price range and timetable are redacted, as is usual at this stage.

KTZ operates about 16,000 kilometers of railway and handled 99.7% of Kazakhstan's rail freight turnover in 2025, the document says. It employed 119,910 people at the end of June.

Total revenue and other income rose about 27% in 2025 to KZT 2.76 trillion, which the filing puts at $5.65 billion. Profit for the year more than doubled to KZT 343.6 billion from KZT 160.8 billion. In the first half of 2026, profit was KZT 191 billion, up from KZT 86.1 billion a year earlier.

The company warns that the trend will not hold. It expects a "significant decrease in net profit" for 2026, citing higher interest and depreciation charges from its investment program, listing expenses, smaller increases in regulated tariffs than in 2025 and rising staff and purchasing costs.

Proceeds are earmarked for four uses: digital railway infrastructure; the Bakhty-Ayagoz line, a new 303-kilometer railway that would create another border crossing with China; repayment of borrowings, including a bond held by Samruk-Kazyna; and working capital. The Bakhty-Ayagoz line is expected to cost about KZT 377 billion, and the IPO money would cover only part of that, the filing says.

Debt, a covenant waiver and a deadline

The balance sheet explains why timing matters. Borrowings stood at KZT 3.78 trillion on Sept. 30, up from KZT 3.19 trillion at the end of 2025, according to the filing. Total liabilities were 70.3% of assets at the end of June, and current liabilities exceeded current assets by KZT 923 billion.

At June 30, KTZ did not meet a gearing ratio covenant in COFACE-backed financing for locomotives, which the document says constituted an event of default. Lenders agreed to waive the consequences until Nov. 30. The company says it expects to comply when the ratio is next tested in December, based on the proceeds it would receive from the offering even at the bottom of the price range.

KTZ paid no dividends in the three and a half years covered by the filing. Under Samruk-Kazyna's policy, payouts range from 20% to 100% of free cash flow depending on financial stability ratios, and the fund may decide that no dividend is paid in a given year.

The arrests and the IPO timetable

The executive arrested is Yelzhas Otynshiyev, 39, who became chairman of KTZ's management board on July 20, according to the filing. An acting chairman served from July 8 to July 20, the document shows. Also held is Nurlan Zhakupov, who had run Samruk-Kazyna since April 2023, according to The Times of Central Asia. The outlet reported that the two men were detained on Nov. 11 by the anti-corruption service of the National Security Committee, which confirmed on Nov. 12 that both were in custody on suspicion of a corruption-related offense.

Neither man has been convicted of any offense, and both are presumed innocent. The security service has given no details of the case, citing limits on disclosure during pretrial proceedings, the outlet said. The reports reviewed did not include any response from the two men or their lawyers.

President Kassym-Jomart Tokayev told a Security Council meeting on Friday that the case was "an extremely serious signal of large-scale corruption in state-owned companies," The Times of Central Asia reported. He ordered that the investigation must not interrupt the companies' operations and asked for anti-corruption proposals for state firms by Nov. 24. Reuters quoted him as saying the fight against corruption "should increase the confidence of investors and creditors."

Samruk-Kazyna said it was cooperating with the investigation, according to Reuters, and that the fund and its subsidiaries were operating normally, according to The Times of Central Asia. The Times of Central Asia, relaying a report by the Kazakh outlet Kursiv, said financial experts quoted there suggested the offering could be postponed because the absence of senior managers may complicate corporate decisions. KTZ itself has not announced any postponement, the outlet said.

The draft prospectus posted on Nov. 11 already lists corruption among its country risks. It notes that Kazakhstan scored 38 out of 100 in Transparency International's 2025 Corruption Perceptions Index.

A thin calendar in Hong Kong

The news lands as Hong Kong's new-issue calendar empties out. Of the seven companies that began trading between Nov. 9 and Nov. 13 and have price data on ETNet, three ended Friday below their offer prices. Capital Times has reported on Hong Kong IPOs trading below their offer prices.

As of Friday evening, ETNet's timetable showed no offering open for subscription and one scheduled listing, on Nov. 26.

For KTZ, the nearest fixed date is Nov. 30, when the lender waiver expires. Tokayev's deadline for anti-corruption proposals falls six days before that.