EYE ON THE PURSE STRINGS

Kazakhstan 2011 | ECONOMY | FOCUS: SAMRUK-KAZYNA

Kazakhstan's sovereign wealth fund is a major actor in the economy, and is playing its part in leading the country into the future through targeted investment and support for the budding capital markets.

The National Fund of the Republic of Kazakhstan (Samruk-Kazyna) is without a doubt one of the most important and influential actors in Kazakhstan's economy. Founded in 2008 by the merger of two joint stock companies—Kazakhstan Holding for the Management of State Assets (SAMRUK), and the Sustainable Development Fund (KAZYNA)—the assets of Samruk-Kazyna are monitored by the National Bank of Kazakhstan. The state is the sole shareholder of the fund, which unites 404 subsidiary and dependent organizations and affiliated legal entities. Among the many important companies in the country, of which the fund holds shares either in whole or in part, are: national rail and postal service companies, Kazakhstan Temir Zholy and Kazpost; the state oil and gas company, KazMunayGas; the state uranium company, Kazatomprom; and the national flag carrier, Air Astana. With a total market capitalization of around $38.6 billion, Samruk-Kazyna ranks 19th in the world, between the sovereign wealth funds of South Korea and Alaska. The total assets of the companies in the fund's portfolio amount to more than $70 billion, which accounts for around 40% of economic activity in the country.

Samruk-Kazyna defines its mission as “contributing to the growth of national welfare via increasing the long-term value of the Fund's companies", as well as developing the “stability, diversification, and modernization of the country's economy". Its strategic areas of action target the diversification and modernization of the national economy and the increasing of the long-term value of Samruk-Kazyna's companies. Samruk-Kazyna actively invests in oil and gas, electrical infrastructure, metallurgy, chemistry, and petrochemistry and infrastructure with a view to contributing to the transition of primary industries to the higher, value-added production of goods, as well as to create new non-primary production facilities and to ensure infrastructure development.

The activities of Samruk-Kazyna are also aimed at the stabilization of Kazakhstan's economy, especially in the aftermath of the most recent global economic crisis. Efforts are specifically aimed at stabilizing the financial sector, solving issues in the real estate market, providing support for SMEs, facilitating agribusiness development, and implementing innovative industrial and infrastructure projects.

As a part of the joint action plan for stabilizing the economy and the financial system in 2009–2010, Samruk-Kazyna received additional financing from the government, amounting to over KZ1 trillion. KZT487.5 billion was allocated to financial sector stabilization, KZT360 billion was allocated to residential property sector development, KZT120 billion was allocated to SME support initiatives, and KZT120 billion was allocated to industrial and infrastructure projects.

Samruk-Kazyna has been tasked, alongside the government, with conducting a “People's IPO" for a number of companies in its portfolio, such as power generation company Samruk-Energo, grid operator KEGOC, and postal service Kazpost. In the following two years, national oil company KazMunayGas, railway operator Kazakhstan Temir Zholy, and uranium miner Kazatomprom are also expected to hold IPOs. Samruk-Kazyna's shares in such companies will be offered to retail investors and pension funds on the Kazakhstan Stock Exchange (KASE). The aim is to give the population an opportunity to increase its own wealth through the acquisition of shares in leading Kazakhstani companies and participate in the country's economic development, as well as stimulate the capital markets. The first wave of IPOs and SPOs is expected to start some time in 2012.