“Samruk-Kazyna Invest” LLP is an investment company, which deals with direct financing of investment projects directed at creating competitive goods and services with the purpose of qualitative increase of local content.
Type of financing: investments in equity
• projects in the priority sectors of “Samruk-Kazyna” JSC;
• projects aimed at developing intra-group cooperation;
• projects aimed at modernizing the economy of Kazakhstan;
• projects aimed at implementing the Concept on the transition of Kazakhstan to a “green economy”.
Geographic focus: Kazakhstan and other countries, in case if there is a production cooperation with Kazakhstan
Cost of projects: up to $ 150 million. More capital-intensive projects can be passed to “Samruk-Kazyna” JSC.
Investment period: 3-5 years (with the possibility of prolongation for three years)
Average rate of return on the investment portfolio (CoE): 12.54% per annum in tenge
Share of "Samruk-Kazyna Invest" LLP: up to 49% in equity capital
Implementation of «Yellow pages» principles
The Government of Kazakhstan is taking active steps to reduce the share of state participation in the economy and the transition to regulation based on market mechanisms (hereinafter - Privatization). Within the framework of the Comprehensive Privatization Plan for 2014-2016 years it was decided to transfer selected assets and/or companies, which are part of “Samruk-Kazyna” JSC structure, to the competitive environment. The principles of "Yellow Pages" were taken into account while developing the Comprehensive Privatization Plan, which corresponds to the state's long-term plan to strengthen the basis of economy by increasing the share of private sector. According to the Comprehensive Privatization Plan, the share of state property should be brought to the level of the OECD countries by 2020.
The Law of the Republic of Kazakhstan "On Introducing Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Limiting State Participation in Entrepreneurial Activity", adopted on April 22, 2015, limited the permitted activity types for state holdings and directly influences the choice of potential areas for investment from the side of “Samruk-Kazyna" JSC.
The updated Strategy of “Samruk-Kazyna Invest” LLP sets restrictions on the size of participation in owner’s equity of portfolio companies to 49%, as well as a ban on participation in portfolio companies that, in accordance with the criteria established by the Business Code of the Republic of Kazakhstan, refer to small business entities.
The Company adheres to the principle of participation in investment projects focused on the production of domestic goods, the performance of works, the provision of services not represented on the relevant commodity market of the Republic of Kazakhstan, or not covering the needs of this commodity market. Prior to the decision-making, “Samruk-Kazyna Invest” LLP is conducting a mandatory study of the commodity market. If there is a market entity carrying out the production of domestic goods, performing works, rendering services that cover the needs of the relevant commodity market, “Samruk-Kazyna Invest” LLP refuses to participate in the project for the production of given, analogous or interchangeable goods, or the performance of work or services .
"Samruk-Kazyna Invest" LLP makes decision to participate in investment project with a mandatory condition for the subsequent sale of shares (stakes in the charter capital) of the portfolio company, taking into account the payback period of the investment project.
To attract a strategic partner, which meets the following criteria:
· Relevant experience. Since strategic investors are responsible for technical aspects of projects, they have to be domestically or globally recognized experts and to present a proven track record and history of successful project executions;
· Technological aspects. Apart from their experience, potential strategic partners should possess all the advanced technological solutions suitable to the needs of the Company and necessary for planning, implementation and supervision of the stages of the technological side of the business;
· Marketing capabilities. Strategic investors are required to be able to organize new effective methods of operation, predict the trends and market needs, as well as connect to their own or create a new distribution and dealership networks;
· Financial stability. Ability and willingness to take a joint control stake in projects (51% or above) and creditworthiness of the potential strategic investors are crucial. Partners’ insolvency can sabotage the progress of the whole project and can affect all the parties involved into the project.
Making investment decisions
The Company’s project evaluation process has the following main steps:
1. Preliminary review;
2. Due diligence of investments risks related to a project and/or a portfolio company;
3. Detailed due diligence of a project and/or a project company;
4. Participation in equity of a portfolio company;
5. Control and monitoring of investments;
6. Exit from a project.
The Company manages a project and portfolio company as follows:
1. Opening of special bank account in order to control over proper use of investments;
2. Organization and monitoring of regular and planned reporting prepared by a portfolio company;
3. Participation in corporate management of a portfolio company through representatives in management board, also through coordination of appointments and delegation of its representatives in executive board of a portfolio company;
4. Other forms of management not prohibited by the laws of the Republic of Kazakhstan.
The Company considers four options of exits:
1. IPO (Initial Public Offering);
2. Sale to portfolio, institutional and strategic investors at market value;
3. Sale of the Company’s share to a strategic partner;
4. Sale of the Company’s share to “Samruk-Kazyna” JSC for strategic development of the industry.
Competitive advantages of the Company:
1. The Company may use intra-Fund cooperation of the portfolio companies within the Fund’s group.
2. The Company has a pipeline of projects and strategic partners willing to implement investment projects with the Company.
3. The Company can provide consulting services to local and foreign companies.
4. Strong investment team with extensive experience in direct investment.