A BROAD VIEW
1. Azerbaijan is a country rich in oil and natural gas.
2. It wants to be the leading financial centre of the Middle East.
3. It uses a hedge of the local currency against the petrodollar. (If the BRICS move to a regime of convertibility of their currencies into gold, the local hedge is the state-owned AzerGold)
Who are we?
As Frontera EM, we have been active in Azerbaijan since 2017, i.e. since the start of the stock exchange's operation (we bought the first series of SOCAR bonds on the Baku Stock Exchange directly from the market maker after the launch of the listing) and our investment portfolios are audited by EY and NEXIA (Big6) (nexia.com)
How do we operate?
We are dedicated partners for investors and businesses in Azerbaijan, utilising our network of regional partners, facilitating transactions and superior investment returns.
Azerbaijan follows the model of the financial system that was established in Poland during the political transition and additionally applies a number of safeguards for the investor (a solution that is unique in the world is the establishment of client accounts directly with the National Depository Center - in the event of broker-dealer's problems, investments are guaranteed by the state's law - you do not bear the broker's risk).
Your money does not go through our company, it is paid directly to the prime broker in Azerbaijan. We are remunerated by Azerbaijan for increasing volumes on the exchange - a unique business model where we do not charge the client a commission. (A prime broker is an underwriter and market maker of government-guaranteed bond issues - there is only one prime broker in Azerbaijan and it is our strategic partner)
How do we mitigate our risks?
a) The Karabakh issue is resolved after Azerbaijan won the Second Karabakh War in 2020 and Karabakh is a territory belonging to Azerbaijan
b) The pipeline supplying natural gas to Italy is unthreatened by the shelling of pro-Armenian warlords - even during the war there has been no reduction in the volume of natural gas transported
c) Status of the contingent of 2,000 Russian 'peacekeepers' stationed in Karabakh is not officially known after the start of hostilities in Ukraine in February 2022
Where is the hidden risk?
a) War risk - due to the neighbourhood of Armenia supported by the Russian Federation, there is a risk of attacks on Azerbaijani territory, including the Azerbaijani enclave of Nakchivan (a risk mitigated after Azerbaijan's victory in Karabakh, and Russia's entanglement in a new conflict in Europe)
b) Political risk - Azerbaijan is a democratic Republic with Aliyev family rule, which in that region guarantees stability of government and law, which stems from the clan tradition of the region
What sets us apart from others?
Year-on-year results (to be submitted upon your request)
- We open the door for the Investor and introduce to the Azeri market without charging fees and commissions
- We set up a brokerage account with an Azerbaijani prime broker and the NDC and handle the compliance, portfolio management and reporting process ourselves (the investor has access to their money directly through the prime broker)
- There is no one else from Poland present and we are the only Polish investors who are being rewarded by Azerbaijan for bringing in more investors
- We buy government and corporate bonds for the client's account through an issue market maker, prime broker of all issues linked to the Group of Companies belonging to the ruling clan (we offer primary issues of securities of state-owned companies)
- In our experience, demand is huge - we have never had any problems with resale of securities.
- Only the prime broker, our strategic partner, has access to the primary market subscriptions of key business players of Caucasus.