After replacing its chairman and an array of managers, Kazakhstan’s US$64 billion sovereign wealth fund Samruk-Kazyna is planning for a new era with a schedule of privatizations set to generate dry powder for fresh investments - and new partnerships.

All Change at the Top

Almasadam Satkaliev was appointed chair of the board in March, substituting Akhmetzhan Yessimov, who had faced stern criticism from Kazakhstan’s accounts committee over a lack of transparency and falling profitability.

A committee report issued in October 2020 said: “There is still no transparency in procurement procedures, most of the holdings funds continue to be placed in a non-competitive way. Systemic problems have been identified, which are the reasons for the ineffective use of state resources and restraining the development of the market economy.”

Satkaliev appears to have made his mark in shaking up personnel with the replacement of a range managing directors at the fund.

Further ahead, the fund is set to divest assets under the government’s privatization program for 2021-25. According to Samruk-Kazyna, the timeline for privatization will be: Kazpost and Samruk Energo in 2021; oil and gas producer KazMunayGas, Air Astana, mining company Tau-Ken Samruk and Qazaq Air in 2022; and railway company Kazakhstan Temir Zholy in 2023.

The fund’s creation in 2008 was inspired by Singapore’s state-owned investor Temasek, with a focus on long-term value creation from government assets. The sale of assets will provide Samruk-Kazyna with capital for future strategic developments projects, which are set to involve close relationships with foreign state-owned investors.

Forging New Relationships

This week, the Kazakhstan fund used the St. Petersburg International Economic Forum as a platform to secure new partnerships. The Qatar Investment Authority (QIA) was cited as a potential co-investor in infrastructure, logistics, renewable energy, and the privatization program. 

It also announced a framework agreement with Russian petrochemicals producer Sibur and Kazakhstan oil and gas producer KazMunayGas to create a world-scale, gas-fed petrochemicals complex with capacity of 2 million tonnes per annum of polyethylene and polypropylene. An FID is expected by the end of the year and if agreed would make Kazakhstan self-sufficient in these polymers, spurring potential growth in downstream manufacturing sectors.

Mubadala is set to become a major factor in the fund’s strategy. In February, the Abu Dhabi investor’s green investment arm, Masdar, signed agreements with Samruk-Kazyna to explore joint initiatives in renewables. These included developing a 500MW wind farm project with operations beginning by end-2024. Oil-rich Kazakhstan aims to raise the share of renewables in electricity generation from 1% in 2020 to 10% by 2030 and 50% by 2050 by exploiting its huge wind and solar power potential.

French public investment bank Bpifrance is also set to become a long-term partner. At the end of October 2020, Samruk-Kazyna and Bpifrance announced the launch of a EUR100 million co-investment partnership for the development of bilateral trade. The agreement is dedicated to Kazakhstani, French, or joint-venture SMEs, and intermediate-sized companies operating in industry, agriculture, ecological and energy transition, education and health.