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Samruk-Kazyna and Da Vinci Capital to create a $100 million joint private equity fund
TURKISTAN Special Economic Zone wins in three nominations of the Global Free Zones of the Year 2019 prize awarded by the fDi Magazine
LONDON, 23 October 2019 – Kazakhstan’s investment opportunities and the further development of Kazakh-British business relations were the key topics discussed during the visit of the Kazakh delegation representing the public and private sectors led by Deputy Minister of Foreign Affairs of Kazakhstan Roman Vassilenko.
The 3rd meeting of the Kazakh-British Business Council and the Kazakhstan Global Investment Forum 2019 were held in London as part of the visit. The forum was organised by Financial Times, an influential international newspaper, the fDi Magazine, Samruk-Kazyna National Welfare Fund, Kazakh Invest National Company, and the Embassy of Kazakhstan in the UK.
Over 200 business executives from the manufacturing, agricultural, chemical, mining and financial sectors, as well as metallurgy, alternative energy, logistics and digital technologies spheres attended the forum.
The event was dedicated to the vast business and investment opportunities Kazakhstan has to offer, as well as the latest political and economic transformations in the country. As a rapidly growing economy strategically located at the crossroads of Europe and Asia, Kazakhstan has the potential to become an important commercial partner for the UK after Brexit.
“Kazakhstan is the largest economy in Central Asia, accounting for more than half of the region’s GDP. We are also widely considered to have the best investment climate in the region, having attracted over $300 billion in foreign direct investment since independence,” Mr. Vassilenko stated in his opening address.
He stressed that besides the business climate, foreign investors have been attracted by Kazakhstan’s political stability demonstrated, among other developments, by the smooth transition of power and the election of the new President, Kassym-Jomart Tokayev, earlier this year; well-educated workforce; and the access the country provides to a fast-growing regional market of 500 million consumers.
Mr. Vassilenko noted that the Ministry of Foreign Affairs of Kazakhstan, which since the beginning of this year was entrusted with attracting investment into the key sectors of the economy, is making every effort to achieve its objectives.
The key forum speakers included the Chair of the Board of the Samruk-Kazyna National Welfare Fund Akhmetzhan Yessimov, Governor of the Astana International Financial Centre (AIFC) Kairat Kelimbetov, UK Minister for Investment of the Department for International Trade Graham Stuart MP, UK Prime Minister’s Trade Envoy to Kazakhstan Baroness Emma Nicholson, Chair of the All-Party Parliamentary Group on the Belt and Road Initiative Faisal Rashid MP, and the President of the European Bank for Reconstruction and Development (EBRD) Sir Suma Chakrabarti.
Speaking at the plenary session, Mr. Stuart noted that “The UK is now one of the biggest foreign direct investors in Kazakhstan, showing the confidence our firms have in your dynamic economy. Hundreds of British companies have their licenses to operate in Kazakhstan with total trade between our nations worth £2.7 billion last year. Now, as the UK prepares to leave the European Union and become truly a global champion of free trade, we want British firms to play an even more central role in helping Kazakhstan grow and develop over the coming decades”.
Kazakhstan’s improvement in the World Bank’s Doing Business 2019 ranking serves as a demonstration of efficient efforts on improving the country’s investment climate. Kazakhstan joined the top 30 countries with the most favourable conditions for doing business, reaching 28th spot among 190 countries.
“At the heart of Eurasia Kazakhstan’s GDP has expanded four percent in the past two ears and it provides a wonderful stable platform for which we are deeply grateful for British companies to access their neighbours in the Eurasian Economic Union, China and Uzbekistan. And Kazakhstan has attracted the lion’s share of inward investment into the heart of Eurasia. And today, the Astana International Financial Centre and many other institutions will show us the potential investment opportunities and perhaps give us more current possibilities of the privatisation programme of state-owned companies,” Baroness Nicholson said.
The role of Samruk-Kazyna, which manages Kazakhstan’s largest state assets in various industries, was a special topic on the agenda.
“Taking into account the global economic trends, the [Samruk-Kazyna] Fund approved a new strategy aimed at diversifying income by investing in such promising sectors as petrochemical industry, renewables, high tech, Industry 4.0, as well as creating joint private equity funds with sovereign funds and major investment companies,” Mr. Yessimov said.
He also noted that over the next five years, the Fund plans to invest more than $38 billion in the above areas, where $32 billion will be foreign investments of which British companies are expected to be a part of.
The forum participants stressed the importance of the AIFC that operates on the principles of English common law. The Centre is an important platform for attracting investment, has the appropriate financial instruments and provides international level services. Investors operate in favourable conditions, which include an independent regulatory mechanism, a court and an international arbitration centre that meet international standards.
Kazakhstan’s participation in the Chinese Belt and Road Initiative gained particular attention. The forum discussed the prospects of developing a tripartite partnership between the United Kingdom, Kazakhstan and China based on the principles of maximising efficiency through the use of the British project management system, Kazakhstan’s resources and Chinese investments.
The Ambassador of Kazakhstan to the United Kingdom Erlan Idrissov and the British Ambassador to Kazakhstan Michael Gifford stressed in their closing addresses that such major economy-focused events indicate the firm intention of the two states to deepen and expand investment and economic cooperation.
On the sidelines of the forum, Mr. Vassilenko met with top British business executives and the leadership of international organisations, including the EBRD, GlaxoSmithKline, Gap Insaat, Investcorp, Independent Power Corporation, United Green, Worley Parsons, and International Development Ireland Ltd.
The 3rd meeting of the Kazakh-British Business Council, co-chaired by Baroness Nicholson and Mr. Yessimov, discussed further plans for developing cooperation. The sides also noted the state and prospects of the privatisation programme of Samruk-Kazyna’s portfolio companies, marking Kazatomprom’s successful listing on the London Stock Exchange last year.
Following the Kazakh-British Business Council meeting, Samruk-Kazyna signed an agreement with Da Vinci Capital investment company on the creation of a $100 million joint private equity fund. Under the agreement, the fund is to invest at least $40 million in Kazakh enterprises in the IT and digitisation sectors to facilitate their development and subsequent IPO.
Samruk-Kazyna also signed a co-investment agreement with EDP Renovaveis, the world’s fourth largest solar and wind power company. The document regulates the principles of the joint implementation of renewable energy projects in Kazakhstan. EDP Renovaveis plans to implement a project to build a 250 MWatt solar power plant in Kazakhstan.
The event also saw the signing of two memoranda of cooperation:
- between the QazIndustry Kazakhstan Industry and Export Centre and the International Development Ireland Ltd on the assistance in attracting Irish investment projects worth at least 50 billion tenge to the territory of Kazakhstan’s special economic and industrial zones, and
- between the Ministry of Health of Kazakhstan and the Gap Insaat company on the construction of a 350-bed hospital in Aktau using the financing provided by UK Export Finance.
The forum also included the award ceremony of the Global Free Zones of the Year 2019 prize, annually awarded by the fDi Magazine to one of the 5,000 free economic zones of the world. The TURKISTAN Special Economic Zone won in three nominations: in the Asia-Pacific region for supporting small and medium-sized enterprises, the Ones To Watch editor’s choice award, and Best Marketing Slogan, which reads “Honoring the past, creating the future”. The victory is expected to raise recognition and improve the attractiveness of the TURKISTAN SEZ for foreign investors.
The Kazakhstan delegation’s visit will continue on 24 October, with the sixth meeting of the Kazakh-British Intergovernmental Commission on Trade, Economic, Scientific, Technical and Cultural Cooperation.