Samruk-Kazyna manager looks to diversify portfolio

Q: What is the vision behind Samruk-Kazyna’s new 2018-28 plan? 

A: We are a vehicle for the government to attract investment into Kazakhstan. In 2018, we adopted a new corporate development strategy for the 10 years to 2028. The main idea is to promote a transition of the fund from an operating holding to an investment holding to increase the value of its portfolio, making financial returns for the longer term and thus creating wealth for future generations. The three main strategic goals we will focus on concern the efficiency of portfolio companies, income diversification and sustainable development. 

Q: How are you going to achieve these goals? 

A: We have four strategic initiatives to deliver these goals. We want to increase the profitability of portfolio companies through digital transformation, measures that drive operational effectiveness, and the modernisation of technologies; streamline the structure of the portfolio by executing the privatisation and disinvestment programmes and look for strategic partners for current investment projects; diversify the income of our portfolio through new investments in Kazakhstan and abroad; and continue to drive corporate governance improvements and sustainable development through the implementation of best corporate governance practices and the execution of sustainable development initiatives.

Q: Can you give us some insights into the fund’s new investment programme? 

A: Our new investment policy does not limit the fund’s investment activities in terms of geography or sector. Samruk-Kazyna is free to invest in any commercial and viable project, either independently or, preferably, with strategic partners. We manage our portfolio by receiving dividends, divesting from assets and reinvesting the proceeds domestically into new industries aimed to support the development of the national economy. We invest abroad to allow the fund to diversify its portfolio and generate income.

Q: When will the investment campaign kick off? 

A: In 2019-20 Samruk-Kazyna will take its first steps in this direction. To start with, we will work closely with external asset managers, leveraging their international expertise and resources. Over time, we will gradually evolve into co-investment partners with private companies and corporations, [and we will also do this] within the framework of intergovernmental agreements, or agreements with other sovereign funds. Ultimately, our aim is to be able to carry out direct investments in various industries and countries, either independently or with partners.

Overall, new investment will make up a maximum of 30% of our assets under management. Investments in Kazakhstan will swing between 2% and 10% of the portfolio; those abroad between 4% and 20%. At the moment the fund is very exposed to commodities: 60% of its assets are exposed to commodity prices. The main goal here is to decrease the risk of the portfolio’s exposure to oil. 

Q: In this new co-investment perspective, what is your message for investors that are unfamiliar with Kazakhstan? 

A: We do understand many international investors are not familiar with Kazakhstan, and they are afraid of bringing their money here. Our presence in any investment project is going to be a guarantee per se. On a more national level, the country has done well since independence. Its main challenge now is the diversification of the economy as most of the GDP still comes from oil and gas and mining.

We put in a lot of work to make the investment environment attractive and the economy is expected to grow at an annual 4.1% in the next five years. The new government will continue to work in this direction. New president Kassim-Jomart Tokayev has been very clear that all the things initiated in past years will continue.