Kazakhstan Chamber of Commerce in the USA

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Evolution of role sees fund gearing up for ‘People’s IPO’ 0

Posted on December 25, 2011 by Alex

The heart of Kazakhstan’s economy, Samruk-Kazyna has, since its inception, played a crucial role in the country’s industry and economy. Now the fund is ready to float some  of its assets at discounted prices to retail investors. By Clare Nuttall

Kazakhstan’s sovereign wealth fund Samruk-Kazyna put to work billions of US dollars to support the economy during the global economic crisis. With Kazakhstan growing strongly, the fund’s role has evolved – it is now responsible for creating new industries and increasing efficiency in the economy’s most important companies.

This year will see further dramatic changes, as minority stakes in some of its largest and most attractive companies are floated on the domestic stock exchange. Samruk-Kazyna was created in the depths of the crisis through the merger of two existing organizations – holding company Samruk and investment company Kazyna – in October 2008, and its importance to the Kazakh economy cannot be overestimated. Its subsidiary companies include the national rail and postal companies, electricity grid operator Kegoc, state oil-and-gas giant National Company KazMunaiGas, nuclear company Kazatomprom, national air carrier Air Astana, and three of the top four banks. It is also the parent of the Damu small enterprise fund, private equity fund of funds Kazyna Capital Management, and other  financial organizations.

Overall, Samruk-Kazyna manages assets worth in excess of $70 billion, accounting for around 40 percent of the economic activity in the country. It has a total of 404 subsidiaries and affiliated companies. As of March 2010, Samruk-Kazyna announced it had invested KZT897 billion ($6.1 billion) from Kazakhstan’s National Fund to support the economy during the crisis. Its largest financial commitment was to the banking sector, where it invested some KZT486 billion.

Other anti-crisis measures included supporting the real-estate sector (KZT360 billion), support for small and medium-sized enterprises (KZT120 billion) and implementing industrial and infrastructure projects (KZT121.5 billion).

Samruk-Kazyna became the majority shareholder of  BTA Bank and Alliance Bank, injecting liquidity when both were on the brink of collapse in February 2009. Today, a debt restructuring for the two banks has been agreed with creditors.

At the same time, the fund took minority stakes in Kazakhstan’s other big-four banks, Halyk Bank and Kazkommertsbank. Now that GDP growth in Kazakhstan has returned to pre-crisis levels, Samruk-Kazyna is starting to divest some of the assets it acquired during the crisis. The fund has already exited its investment in Halyk, selling the stake back to the bank and its majority shareholder Almex.

Kazkommertsbank could buy back its shareholding in the near future. A sale of BTA to Russia’s Sberbank is still on the cards and Samruk-Kazyna is also looking at potential exit routes for Alliance, but it is adamant that it will sell its shareholdings only if the price is right.

Post crisis, Samruk-Kazyna is involved in raising the efficiency of its subsidiaries, and is the main conduit for big foreign investment projects. The emphasis within Kazakhstan has shifted toward production of processed and value-added products, rather than being purely a supplier of raw materials.

Several of the priority projects within the 2010-14 Accelerated Industrial and Innovative Development program are aimed at achieving this goal. Samruk-Kazyna is already working to diversify and industrialize Kazakhstan. The ‘breakthrough projects’ under the Samruk-Kazyna umbrella include reconstruction of the Atyrau refinery, modernization of the national electricity grid and construction of several new power stations. Within Samruk-Kazyna, two holding companies created in late 2008 are responsible for the chemicals and metals sectors, respectively. The United Chemicals Company was set up to develop a national chemicals industry and reduce Kazakhstan’s dependence on imports of products such as fertilizers. Tau Ken Samruk is the holding company for the Kazakh government’s stakes in metals and mining companies. While oil and gas still account for the lion’s share of Kazakhstan’s exports, metals and mining have been growing in importance in recent years.

Soaring metals prices, and the steady growth in demand from neighboring China in particular, have provided an impetus for Kazakhstan to increase its output. The government stakes in two major London Stock Exchange-listed mining companies – Eurasian Natural Resources Company (ENRC) and Kazakhmys – are held within Tau Ken Samruk. Both companies have an immense presence in the Kazakhstan mining sector, as well as internationally.

Kazakhmys is the largest copper producer in Kazakhstan and one of the top 10 producers worldwide. ENRC – a diversified natural resources group – has a presence in China, Russia, Brazil and Africa, as well as in Kazakhstan. This year has already seen significant changes for Samruk-Kazyna. On April 12, Timur Kulibayev was promoted to chairman as part of the post-elections reshuffle. Kulibayev, the son-in-law of Kazakh president Nursultan Nazarbayev, was previously the company’s deputy chairman.

The fund’s main task this year will be to carry out the ‘People’s IPO’ program, under which shares in companies that are wholly or partly owned by Samruk-Kazyna will be offered at a discount to retail investors and pension funds. In addition to raising funds for expansion, the program is also intended to stimulate the domestic capital market.

At least some of the IPOs are due to take place by the end of this year. Companies expected to be part of the first wave of IPOs include power-generation company Samruk-Energo, electricity grid operator Kegoc, postal service Kazpost and KazMunaiGas Exploration and Production. In the following two years, IPOs of other companies – including Kazatomprom, National Company KazMunaiGas, and railway operator Kazakhstan Temir Zholy – are planned.

SOURCE: Invest in Kazakhstan, 2011, p. 45-46

Kazakhstan-born financier to buy Barclays’s Russian bank 0

Posted on October 29, 2011 by Alex

Kazakhstan-born financier Igor Kim  has  emerged as  thefrontrunner to acquire Barclays Bank’s Russian retail subsidiary, Expobank, the  Kommersant business weekly reported on Friday.

Kim and Barclays reportedly  finalized the deal on Friday, according to sources cited by Kommersant.  Kim  outbid Russia’sRenaissance Capital in a  contest to  obtain the asset, after Kazakhstan’s Kazkommertsbank decided last month not to pursue the deal.

Kazakhstan struggles with grain export bottlenecks Kazakhstan has been using all available means to store its grain crop, including rail trucks, as it struggles to find suitable options to export its record harvest.  Kazakhstan, a large landlocked country, historically used Black Sea ports in Russia to ship its grain.

However, Russia faces its own logistical bottlenecks this year as it struggles to deal with its own strong harvest. On Friday, Kazakhstan’s Ministry of Agriculture said the country harvested 28.2 million tonnes of grain on 16 million hectares, or 99% of the total area to be harvested.

SOURCE: Kazakhstan Daily News Brief, dated October 24, 2011 available at http://silkroadintelligencer.com/wp-content/files/srikznewsbrief_oct24_2011.pdf

KASE Index rises 1.23% on Monday 0

Posted on October 23, 2011 by Alex

The primary index on the Kazakhstan Stock Exchange (KASE), the KASE Index, rose by 1.23% to 1,163.88 points on Monday, after staying nearly flat all last week, the stock exchange said in a statement.  Halyk Bank, Kazakhstan’s second-largest lender, gained 7.9% on Monday while Kazkommertsbank, the largest Kazakh bank, dropped 3.8%.  Since the beginning of the year, the KASE Index is down by 32.3%.

SOURCE: http://silkroadintelligencer.com/wp-content/files/srikznewsbrief_oct18_2011.pdf

Kazkommertsbank to lend to local SMEs 0

Posted on October 16, 2011 by Alex

Kazakhstan’s largest bank, Kazkommertsbank, said on Thursday it had been selected by the Asian Development Bank (ADB) and the state-owned DAMU Entrepreneurship Development Fund to implement ADB’s SME lending program.  ADB will lend KZT7.4 billion ($50 million) to Kazkommertsbank to provide financing to local small-  and medium-size businesses.

ADB said in September it would provide a total of KZT22.2 billion ($150 million) in local-currency financing to support SME lending in Kazakhstan.

SOURCE: SRI, Kazakhstan Daily News Brief, Issue dated October 14, 2011

Kazkommertsbank receives $130 million to fund stalled construction projects 0

Posted on October 13, 2011 by Alex
(SRI) – Kazkommertsbank has received a third KZT19.3 billion ($130 million) tranche of government funding to finance stalled construction projects in Astana and Almaty, the bank said in a statement on Thursday.

The funds will be used to fund residential construction by Global Building Contract (GBC), a joint venture between the state-owned holding and investment company Samruk-Kazyna and Kazkommertsbank. GBC has been set up in 2009 to finish the construction of several major residential development projects started by Kuat, once Kazakhstan’s largest construction company which had collapsed in the aftermath of the credit crunch in 2007. The company, whose executives have been accused of massive fraud, had halted work at a number of sites in Almaty and Astana.

Kazkommertsbank has already received two tranches worth KZT20 billion ($135 million) and KZT14.7 billion ($99 million) in December 2009 and November 2010, respectively.

SOURCE: http://silkroadintelligencer.com/2011/10/07/kazkommertsbank-receives-130-million-to-fund-stalled-construction-projects/

Kazakhstan Daily News Brief – October 7, 2011 0

Posted on October 06, 2011 by Alex

ENERGY:

Kazakhstan, Karachaganak partners yet to reach agreement – Mynbayev
(SRI) – Kazakhstan is yet to reach an agreement on buying into the Karachaganak oil and gas project, and new negotiations on the planned third phase of its development will be necessary once a deal is reached, Kazakhstan’s Minister of Oil and Gas Sauat Mynbayev said on Thursday.

Kazakhstan not ready to join EU-backed gas pipelines (SRI)

KazMunaiGas starts reserves audit (SRI)

Caspian oil shipments to fall amid work on CPC pipeline expansion (Reuters)

Max loses Kazakh tax appeal (Upstream Online)

Kazakh oil giant denies talks with striking workers (RFE/RL)

BUSINESS AND ECONOMY:

Kazkommertsbank receives $130 million to fund stalled construction projects (SRI)

Kazakhstan produces 23.8 million tonnes of grains to date (AgriMarket.Info)

Kazakh Ministry of Economic Development and Trade raises 2011 foreign trade forecast(Interfax)

Indicators – October 6, 2011 (Reuters)

POLITICS AND SECURITY:

Kazakhstan welcomes Putin’s Eurasian Union concept (Daily Telegraph)

SOCIETY:

Shrinking lake in Kazakhstan portends hard, dry times ahead (Washington Times)

SOURCE: http://silkroadintelligencer.com/2011/10/07/kazakhstan-daily-news-brief-october-7-2011/

Kazakhstan Daily News Roundup – September 30, 2011 0

Posted on September 30, 2011 by Alex

Kazakhstan Daily News Roundup – September 26, 2011 0

Posted on September 26, 2011 by Alex

ENERGY:

Tengizchevroil pays $11.5-million environmental fine – PGO (SRI)

KMG, Sinopec sign agreement on cooperation (SRI)

BUSINESS AND ECONOMY:

Kazakhstan faces growing need for warehouse space
(bne) – New modern warehouses are being built in Kazakhstan, but the country still has a pressing need for more, especially in the far-flung central and western cities where food is still stored in rat-infested Soviet buildings.

KASE Index falls 6.74% on Thursday and Friday (SRI)

BAE may sell part of Air Astana stake in preparations for “people’s IPO” (SRI)

Kazakhstan to produce 25 million tonnes of grains this year (SRI)

Kazkommertsbank to liquidate Netherlands-registered subsidiary (SRI)

Kazakhstan sees GDP growth at 7% for 10 years – Foreign Minister (Reuters)

Kazakhstan, Turkmenistan to commission rail link in October (SRI)

Kazakhstan keen to expand UAE trade ties (Khaleej Times)

Tajik Air planes refuel in Kazakhstan (Trend)

Kazakhstan not to export wheat to Iran (Trend)

Indicators – September 23, 2011 (Reuters)

POLITICS AND SECURITY:

Russia, Kazakhstan may merge air defense systems – RIA Novosti (Bloomberg)

Nazarbayev reiterates Kazakhstan’s willingness to house nuclear fuel bank (Interfax)

SOCIETY:

Energy coin fuels Kazakh production plans (Variety)

REGIONAL:

Mongolia’s high plains herders warily eye coal truck (Reuters)

New ‘Silk Road’ eyed for Afghanistan (AFP)

SOURCE: http://silkroadintelligencer.com/2011/09/26/kazakhstan-daily-news-roundup-september-26-2011/

Kazakhstan Daily News Roundup – September 21, 2011 0

Posted on September 21, 2011 by Alex

Kazakhstan Daily News Roundup – September 13, 2011 0

Posted on September 13, 2011 by Alex

ENERGY:

Kazakhstan simmers as striking oil workers sacked
(bne) – Angry protestors gather every day in the main square in the Kazakh town of Zhanaozen in a rare display of popular dissent. Many of them used to work at Uzen, one of Kazakhstan’s largest oilfields, but were fired in August in an attempt to stop a four-month strike at the facility.

Kazakhstan to produce 102 million tonnes of crude in 2016 (SRI)

Max Petroleum makes discovery at Sagiz West (Proactive Investors)

BUSINESS AND ECONOMY:

On the move: Head of Association of Financiers of Kazakhstan elected Kazkommertsbank independent director (SRI)

Mobile rates fall in Kazakhstan but remain highest in CIS (SRI)

Kazakhstan exports grow 52% in first half – KazNex (SRI)

Chagala Group net profit rises in first half (SRI)

Fitch affirms Eastcomtrans at ‘B-’ (SRI)

Kazakhstan to spend $164 million to build third communications satellite (SRI)

Indicators – September 12, 2011 (Reuters)

METALS AND MINING:

Frontier Mining – pushing forward to production (Proactive Investors)

POLITICS AND SECURITY:

Kazakhstan to spend KZT13 billion on fighting extremism in 2012 (Interfax)

SOURCE: http://silkroadintelligencer.com/2011/09/13/kazakhstan-daily-news-roundup-september-13-2011/



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