Investment activity

To increase commercial assets in the Fund’s portfolio, and thus focus on continuing to optimize and restructure the portfolio with a full transition to active management of the investment portfolio by 2024 – these are the objectives of the Fund in the foreseeable future.

The transition of the Fund to the format of an investment holding implies the presence of two categories of assets in the portfolio. The first is strategic assets, where the controlling share of the Fund will be retained. These assets will be managed through the exercise of shareholder rights and with the help of the Fund’s representatives on the Board of Directors of these companies.

During the period of economic recovery, the Fund’s investments will concentrate on development of priority areas under the principles of co-investment.

There are two directions for foreign investments: direct and portfolio. Direct investments in the long term are planned to invest in projects implemented in developed countries, in industries that will ensure the diversification of the Fund’s portfolio.

In this part, the Investment Policy of Samruk-Kazyna JSC fully complies with and supports the implementation of the Fund’s Development Strategy until 2032.

Investment Policy

And, finally, the third is to ensure the diversification of the portfolio by geography, economic sectors and asset classes.

At the same time, the Fund is guided by investment principles.

The principle of commercial expediency is that the investment projects of the Fund and portfolio companies are based on the principles of commercial expediency, long-term interests and maximizing the profitability and return on investment.

The principle of “yellow pages”: the Fund’s investments in facilities conducting their economic activities on the territory of Kazakhstan are carried out taking into account the restrictions established by the legislation of the Republic of Kazakhstan and do not hinder the development of the private sector, do not restrict competition, do not lead to monopolization.

The principle of responsible investment is to promote sustainable development, including economic, social and governance principles (ESG principles), as well as a ban on investments in tobacco, alcohol, weapons, etc.

The Fund is a long-term investor aimed at creating sustainable value and able to withstand short-term market volatility.

Investment criteria

• All investments must have a positive net present value (NPV>0) and an internal rate of return above the cost of equity (IRR>CoE).
• Availability of a strategic partner: new investments of the Fund are carried out jointly with a strategic partner.
• The Fund carries out international investments in sectors of the economy that are linked strategically to Kazakhstan (with the exception of the oil industry). It also makes investments at all stages of the project implementation and stages of the project life cycle.

To implement investment plans, the Fund uses all available sources of funds - its own funds, dividends from portfolio companies, funds from divestments (sales of companies (shares) when deciding to exit, borrowed funds raised on domestic and international capital markets, intra-group financing and other sources.

Priority investment projects of the Fund

In 2022, the Fund continued to implement the First package of priority investment projects, which was approved at the meeting of the Investment Headquarters of the Government of the Republic of Kazakhstan on November 9, 2021. Most of them are included in the National Action Plan and various country program documents.

In accordance with the investment strategy of Samruk-Kazyna JSC, an initiative has been put forward to implement the Second package of priority investment projects of the Fund Group totaling more than KZT20 trillion. The projects cover the areas of expansion of critical infrastructure of petrochemistry, electric power, gas infrastructure, railway transport and telecommunications.

The implementation of this group of projects will create over 39 thousand temporary and 10 thousand permanent jobs, introduce additional electrical power up to 8.4 GW, give a powerful impetus to the development of the petrochemical cluster in the western region (polyethylene – 1.25 million tonnes/year, butadiene – 45 thousand tonnes/year, isobutane-isobutylene fraction – 130 thousand tonnes/year, synthetic rubber – 100 thousand tonnes /year, methyl tert-butyl ether - 40 thousand tonnes/year), increase the volume of main gas transportation by 15 billion m³/year, increase the level of raw gas utilization by 4 billion m³/year and much more.

The Fund participates only in projects that are critically important for the country, as well as in projects identified by the Head of State that cannot be implemented by private investors.

New investments in renewable energy

In 2022, the Fund, together with Portfolio Companies, worked on innovative investment projects involving strategic partners in the renewable energy industry, among others. Thus, within the framework of the Memorandum of Understanding signed in 2021 and 2022, the Agreement on Principles and the Term Sheet between the Fund, KMG, Total Eren and the Ministry of Energy of the Republic of Kazakhstan, it is planned to implement a large-scale project for the construction of a 1 GW wind farm with an energy storage system.

A similar wind generation project is discussed with a partner from Saudi Arabia, ACWA Power. The project “Construction of the wind powere plant in the Shelek corridor with a capacity of 60 MW with the prospect of expansion to 300 MW” is also has been launched. On September 12, 2022, as part of the opening ceremony of the WPP station in the Shelek corridor with a capacity of 60 MW, a Memorandum of Cooperation was signed between Samruk-Kazyna JSC and PowerChina Resources Limited on further development of Phase 2 of the project.

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Activities of Samruk-Kazyna Invest LLP

Samruk-Kazyna Invest LLP (SK Invest) is an investment company that, together with strategic partners, makes direct investments in projects on the territory of the Republic of Kazakhstan.

The main objective of the company is to diversify the investment portfolio of the Fund.

SK Invest is designed to stimulate development of the economy by creating new industries, quality jobs, reducing import dependence, increasing exports, attracting foreign investment and technology.

Key performance results

In December 2022, Fitch Ratings assigned SK Invest long-term issuer default ratings (IDR) at the level of BB+ with the “Stable” outlook. The received international credit rating will increase the reputation and the level of trust in the company, as well as have a positive impact on the brand awareness of SK Invest.

Plans for 2023

In 2023, the company plans to increase its investment portfolio by investing in industrial projects in the field of building materials, food industry, mechanical engineering, chemical and electrical industries. The total cost of the projects is KZT290.7 billion, including direct foreign investments in the amount of KZT101 billion from investors of China, Switzerland, Turkey.

It is planned to update the Development Strategy of Samruk-Kazyna Invest LLP for 2023-2032 in accordance with the mission, vision, strategic initiatives and key priorities, as well as with the national development priorities of the Republic of Kazakhstan.

Taking into account the current socio-economic development situation in Kazakhstan and the role of the Fund in the country’s economy, it seems appropriate to focus investments primarily in the economy of Kazakhstan (in strategic projects).

Globally, the Fund will strive to diversify its portfolio and fill it with breakthrough projects with a high share of exports.

In foreign markets, emphasis will be placed on cooperation with major international organizations and sovereign wealth funds in order to implement jointly initiatives and projects.

Attracting international strategic partners will have a positive effect in the form of technology transfer and attracting investments for the sustainable development of the country’s economy.

This will allow the Fund to gain access to new markets and increase the experience of international investments, pooling resources through co-investment mechanisms and improving the image of Kazakhstan and Samruk-Kazyna JSC.