Freedom Holding agrees to up to US$1.16B in Kazakhstan project bonds

Up to US$1.16 billion in project borrowing could finance an AI supercluster and data centres in Kazakhstan, alongside telecoms and other businesses. Freedom Holding Corp. NASDAQFRHC, the financial-services group operating in 22 countries, disclosed on Thursday that its subsidiary agreed to issue five-year bonds carrying a 7.8 per cent coupon.

The issuer is wholly owned FRHC-IF.SPC Ltd., a special-purpose company in the Astana International Financial Centre. Freedom and the subsidiary signed the investment agreement on Oct. 23 with Kokzhiyek Fund LP, an investment fund within Kazakhstan's Baiterek national holding group, for bonds intended to list on the Astana International Exchange.

The Oct. 29 filing describes a subscription commitment up to a ceiling, with proceeds to enter escrow and become available in stages. Freedom guarantees the obligations, while releases require the fund's consent and an independent financial and technical controller's confirmation.

Freedom shares traded at US$180.49, up 2.81 per cent on NASDAQFRHC at 12:03 p.m. EDT on Thursday, according to Google Finance. The financing introduces annual consolidated financial covenants beginning with the fiscal year ending March 31, 2027.

Seven Projects Share The Bond Proceeds

The financing covers seven specified projects spanning data centres, an artificial intelligence supercluster, telecommunications infrastructure, media, urban technology and cross-border trade. The filing's proceeds section lists those activities without assigning a dollar amount specifically to AI or providing a commissioning date.

Permitted spending extends beyond new construction and equipment. Under the Oct. 23 agreement, proceeds may reimburse historical capital expenditure, replenish working capital, refinance project-company debt and finance asset acquisitions within the agreed project budgets.

The distinction limits how much of the US$1.16 billion ceiling can be described as new AI investment. The same facility can repay earlier borrowing or reimburse spending already made, and its proceeds support businesses outside computing.

Freedom's June 1 earnings release described the Kazakhstan AI data-centre initiative as a prospective project expected to proceed in phases. That release reported fiscal-year revenue of US$2.19 billion and net income of US$153.3 million for the year ended March 31, 2026.

The bond purchase price will go into an escrow account at Freedom Bank Kazakhstan, another group subsidiary. Each project has separate release conditions, including a guarantee from its project company, and the availability period ends Dec. 30, 2028 unless the fund extends it.

Bonds corresponding to money still undisbursed when that period ends face mandatory early redemption. The remaining escrowed funds return to Kokzhiyek, so the ceiling does not establish that the entire amount will reach construction or equipment suppliers.

Freedom Guarantees Debt And Covers Funding Shortfalls

The Oct. 23 guarantees come from Freedom, its subsidiary Freedom Kazakhstan Ltd. and Timur Turlov, Freedom's chief executive, chairman and majority shareholder. The special-purpose issuer therefore does not isolate the listed parent from the financing obligations.

The agreement requires the issuer, Freedom or project companies to contribute at least 10 per cent of each project's total cost. Separately, their aggregate own-funds contributions must equal at least 20 per cent of the principal amount of bonds issued.

At the full US$1.16 billion ceiling, that second requirement implies at least US$232 million of aggregate contributions, calculated from the Oct. 23 terms. Cost increases and currency-related funding gaps also remain with the issuer, Freedom or the project companies.

"Any increase in Project costs, and any funding shortfall caused by currency movements, must be covered by the Issuer, the Company or the Project Companies without additional funding from the Fund," Freedom said in the filing.

Security expands as proceeds are released. The fund becomes entitled to pledges over project assets, revenue-contract claims, land and all of each project company's equity, alongside project-company guarantees limited to allocated financing plus accrued interest.

Freedom separately completed a US$300 million ordinary-share offering on July 13. That announcement assigned proceeds to continued expansion and international investment; it does not establish that the equity raise satisfies this bond agreement's contribution requirements.

Operating Equipment Supports A Different Financing Model

The deal follows equipment-backed borrowing for operating AI infrastructure. IREN Limited NASDAQIREN, an AI cloud and data-centre operator, announced with Wingspire Equipment Finance on Oct. 28 that it had closed US$363 million of equipment financing.

That transaction refinanced recently acquired, revenue-generating servers and networking systems. Its security was principally the financed equipment, supported by multiyear customer contracts, whereas Freedom's agreement releases money against project-specific approvals and security.

Read more: IREN Limited completes US$363M refinancing for operating AI equipment

Freedom's first annual covenant test covers the fiscal year ending March 31, 2027. It must maintain corporate debt to equity at no more than 3.5 times and liquid assets to corporate debt at no less than 1.1 times, before the project-funding window closes on Dec. 30, 2028.