Freedom Holding Corp: Ecosystem, International Expansion, And Envy Of Competitors

Freedom Holding Corp. is an international investment group of companies that plays a significant role in the financial sphere within the former Soviet Union. The company is listed on NASDAQ under the ticker FRHC. Over 15 years of activity, the holding has achieved big gains in its core business of brokerage services along with other important spheres.

Freedom Bank has been working in Kazakhstan for almost three years. During this quite short period, it has developed and launched unique digital products with no peers either in Kazakhstan or in the global market. Since its first day of operation, Freedom Bank has set a new record: the company is the market leader in terms of the number of issued mortgages thanks to super-fast scoring procedures. A client can obtain his loan within two hours after filling out an application.

According to a recent survey of the performance by Kazakhstani financial organizations in the first eight months of 2023 by Kursiv.kz, Freedom Bank is the leader in terms of growth of assets in absolute figures (+$1.6 billion), while its loan portfolio increased by 82%. During the review period, Freedom Bank attracted more than $289 million from individuals.

However, the bank isn’t the only facet of Freedom’s ecosystem in Kazakhstan. Freedom Broker has been ranked as the leading retail broker in the country for several years now. It provides clients direct access to the biggest exchanges such as NYSE, NASDAQ, the London Stock Exchange, the Stock Exchange of Hong Kong, and the Frankfurt Stock Exchange. As of Q2 of 2023, the total number of accounts registered with Freedom Broker was more than 200,000, while the entire Freedom Holding Corp had more than 370,000 clients around the world as of March 31.

Apart from the bank and broker, the ecosystem of Freedom also includes the two insurance companies Freedom Insurance and Freedom Life, the Freedom Pay payment aggregator and Freedom Mobile, a network of cell phone stores. Finally, the newest element of the holding ecosystem is Freedom Telecom, a new telecommunication operator that is engaged in the development of broadband internet and a 5G mobile network.

In addition, the holding is heavily investing in various projects and startups like food tech startup Arbuz.kz, online services for booking flight tickets Aviata and Сhocotravel, and Ticketon, a Kazakhstani online service for buying tickets in cinemas, theaters and various events. With the help of this approach, the holding is expanding its potential in the sphere of lifestyle services.

Globalization

Even though Kazakhstan is the key market for the holding, it is not the sole market where Freedom currently operates. CEO of Freedom Holding Timur Turlov wants its company to operate globally. By now, the holding runs its branches in 16 countries, including the U.S. and countries in Europe and the CIS.

In the U.S., Freedom has been rapidly growing since 2020 when it acquired local broker Prime Executions. In addition to brokerage service, Freedom is also engaged in investment banking. In 2020, the holding obtained an underwriter’s license. This means that Freedom Holding is able to act as an organizer of initial public offerings (IPO) on the U.S. exchanges.

This privilege is given to only a few companies and this year the holding has become a real underwriter by organizing an IPO for Intensity Therapeutics and SPO (secondary public offering) for VolitionRx Limited, Contango ORE and Beam Global. In February of this year, Freedom acquired Maxim Group LLC, an American investment bank that is expected to boost the holding business in the U.S.

Another interesting direction of Freedom’s international business is its European segment with headquarters in Cyprus. In 2021, Freedom Finance Europe obtained direct membership in Euroclear, the leading provider of settlement and related securities services for cross-border transactions. As a result, Freedom Finance Europe is able to expand its operational, billing and depository services for clients throughout Europe, the U.K. and the U.S.

Related: What Does Stockholders Equity Mean In A Business?

Biased investigations

Recently, many so-called investigations into the Freedom Holding business emerged in the media sphere. The best known of them was a report by Hindenburg Research. In fact, it was an attack by the bears from Hindenburg aimed at crashing FRHC shares. This investigation turned out to be nothing more than a “speculation and a set of unverified claims.” As a result, the holding’s stock value rose to historical heights as investors’ trust in Freedom has remained rock-solid.

An article published by CNBC after the Hindenburg Research investigation is also full of speculation and unverified information. Even though this article may look impressive at first glance, it is nothing more than another attempt to manipulate the market. According to Freedom, the company doesn’t know about any investigations against it. 

The holding is one of the most audited companies in the world due to these multiple attacks. Freedom Holding is actively collaborating with regulators in the U.S., Europe, Kazakhstan, and other countries where it has its business interests with the purpose of putting an end to all these speculations. Since Freedom is an American holding, the company has a strong team of lawyers who support direct contact with U.S. authorities. It is impossible to impose any sanctions against an American holding based only on a set of biased articles in the media. According to the holding’s lawyers from Morgan Lewis, the company’s position is very strong, while inquiries from regulators were quite short.

Every information attack similar to the one by Hindenburg Research raises certain questions from authorized agencies. It doesn’t matter whether the information in such reports is true because the regulators are obliged to intervene and examine it with scrutiny. This is a common practice that doesn’t bother Freedom Holding as it is a transparent company and the audit opinion by Deloitte has strongly confirmed this. In other words, despite the fact that some competitors try to damage the interests of Freedom with the help of biased reports and misinformation, they are bound to fail.

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