Kazakhstan has always been home of significant Sovereign Wealth, due to vast gas reserves and annual revenues. The country’s most known and largest SWF is Samruk-Kazyna, which was modeled after Temasek and was born out of the merger of two holding companies, Samruk and Kazyna in 2008.
For the past 15 years, Samruk-Kazyna has pursued a natural evolution from a purely domestic holding company to a diversified financial investor, not only in terms of regions but also of asset classes and industries. However, this task has proved to be difficult given the large dependency of the country to crude. The government withdraws an annual dividend from the fund annually, although minor when compared to its AuM (US$ 0.3 bn in 2020, US$ 0.2 bn in 2021).
In April 2021, former Minister Akhmedjan Essimov stepped down as Head of Samruk-Kazyna and passed the baton to Almassadam Satkaliyev, who had spent most of his career in and out the fund and its portfolio companies. Nine months later, the fund decided to half its personnel at holding level, from 248 to 124 employees, in the context of an ambitious transformation program that aims to reduce the role of the state in the economy.
After years planning and announcing several IPOs, the fund finally managed to float some of the shares of its largest and most profitable asset, KazMunaiGas, in December 2022, raising US$ 0.3 billion (same as the annual dividend). This only the third IPO of the group since the scheme was announced in 2011, after KazTransOil and KEGOC. Other privatizations including those of national airlines Air Astana and Qazaq Air, were postponed again.
The country has another umbrella similar to Samruk-Kazyna, called Baiterek (meaning tall poplar as in the tree) and that has been growing its assets at a much more rapid pace during the past few years. Baiterek’s has been tasked with the development of the non-resource-based sectors of the economy, promoting entrepreneurship, urbanizing the economy, increasing exports, and creating a culture of innovation.
In addition to both “strategic funds”, Kazakhstan manages several other funds via its Central Bank, NBK. The first one is a classic stabilization fund (NOK) that invests in purely liquid securities and has remained relatively stable during the past few years. Then there is the smaller and more aggressive play (NIC), which invests primarily in PE and hedge funds; and lastly, the country’s pension fund (UAPF), which suffered significantly withdrawals during covid-19.
A year after the “Qandy Qantar”, the bloody protests that left over 200 protesters dead and a new Prime Minister in office, the country has the chance to leave behind political battles and focus on a diversified and business-driven future. For now, the war in Ukraine could prove an opportunity for the gas-rich country, which this year alone is hoping to deliver up to 1.5 million tons of oil through the Baku-Tbilisi-Ceyhan pipeline, bypassing Russian infrastructure3. More effort in attracting foreign investors and in establishing sustainable international partnerships with other SWFs and PPFs could and should follow.
