(Bloomberg) -- A minority shareholder is set to wrest full control of a top Kazakh bank as part of a settlement to end the biggest asset dispute since Nursultan Nazarbayev resigned as president in 2019, according to people familiar with the matter.

Under the terms of a deal to be announced soon, Galimzhan Yessenov will increase his stake in First Heartland Jusan Bank to almost 100% from near 20%, the people said, declining to be identified as the information isn’t public. The seller is Jusan Technologies, a UK-based company that was linked to a foundation set up by Nazarbayev.

In response to a Bloomberg query, Jusan Bank confirmed that “a constructive settlement” had been reached but provided no further details.

The standoff has been playing out against the backdrop of efforts by President Kassym-Jomart Tokayev to consolidate his control over the $226 billion economy following the signing of a law on clawing back assets the government deems illegally obtained. 

Scramble for Control

In the aftermath of the worst riots in the history of independent Kazakhstan a year and a half ago, Tokayev moved to sideline many allies and family members of his predecessor Nazarbayev and vowed to take on the country’s entrenched oligarchs.

The coming settlement will resolve a legal battle that’s simmered for about five months since Kazakh prosecutors started proceedings to stop the transfer of the bank’s ownership to Jusan Technologies.

The US parent company of Jusan Technologies then counter-sued the Kazakh government, accusing it in a federal lawsuit in Nevada of attempting to seize control of assets worth over $1.5 billion. Yessenov earlier sued Jusan Technologies and its subsidiaries over the value of his stake in the bank and dividend payouts he said he was owed.

Jusan Bank and its parent company have denied “any affiliation” with Nazarbayev or members of his family. 

Kcell, Kazakhtelecom

Yessenov will pay for assets that also include minority stakes in the country’s biggest mobile operator and state-run Kazakhtelecom, the people said, without specifying the amount.

As part of the Jusan deal, the parties agreed to revise upward the value of Yessenov’s stake, acquired after his ATF Bank merged with Jusan, the people said. The settlement includes compensation for unpaid dividends for Yessenov and factors in the difference in the valuation of his stake, they said. 

Jusan has paid more than $500 million in dividends after receiving over $3 billion in state support in 2018 and 2019 as part of a bailout that was among the country’s biggest in recent years. Defaults and debt restructurings by Kazakh banks have forced Nazarbayev’s government to provide at least $18 billion in state aid going back more than a decade. 

In return for payments to Jusan Technologies, Yessenov gets control of the bank’s Kazakh parent, the people said. Under the terms, Jusan Technologies will also offload to Yessenov a stake of about 9% in Kazakhtelecom and a 15% shareholding in mobile operator Kcell, they said. 

The deal is conditional on almost all of Yessenov’s money ending up with a Kazakh university and schools supported by the New Generation Foundation, which replaced the Nazarbayev Fund in Jusan’s group ownership restructure in 2021, according to the people.

A spokeswoman for Yessenov declined to comment. No one answered calls to the public relations agency for Jysan Holding, a parent for Jusan Technologies, and it didn’t immediately reply to an emailed request for comment.

No one was also available to comment at the Justice Ministry, which represents the Kazakh government in courts abroad, and it didn’t immediately reply to an emailed request for comment. 

“We are very encouraged that a constructive settlement has been reached that enables the bank to to capitalize on great opportunities for growth,” Jusan Bank’s press service said. “It is a positive outcome for all parties.”

(Updates with details on past state aid under ‘Kcell, Kazakhtelecom’ subheadline)

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