Kazyna Capital Management - 15 years together with you!

Kazyna Capital Management (a subsidiary of National Managing Holding Baiterek JSC) is a fund of direct investment funds established in May 2007. As a development institution focused on the growth and diversification of the national economy, KСM has been the main driver of the private equity market in Kazakhstan for 15 years. Over the years, KСM has financed 99 projects, created and supported more than 23 thousand jobs. The total revenue of the enterprises that were supported is 1,415 billion tenge, the amount of taxes paid is 55 billion tenge. From 2008 to 2021, the assets and capital of KСM increased almost 4 times. Now the size of the KСM's equity capital is 162 billion tenge, the size of assets is 214 billion tenge, while the size of the investment portfolio is 171 billion tenge. KCM is a member of 16 private equity funds, the amount of cumulative investments of which is $1,797 million. The largest share in the KCM portfolio is occupied by the transport and logistics sector – 38.6%, energy -19% and food production -18.1%. Today there are 58 projects in the KCM portfolio, of which the share of projects in Kazakhstan is 92%. One of the important tasks of the KCM is to ensure the inflow of foreign investment into non-resource sectors of the economy. Thus, over the years of KCM's work, various major partners have been attracted to Kazakhstan in the person of institutional investors, sovereign funds, international financial organizations, including: the global direct investment fund Wolfensohn Capital Partners, the state holding company Mubadala, the Chinese investment company CITIC Group, the European Bank for Reconstruction and Development, the American venture fund 500 Startups, the largest The Southeast Asia Fund Quest Ventures, the German development Institute DEG-Deutsche Investments-und Entwicklungsgesellschaft, a large Turkish company TAV Holding and others. Many factors influence the further expansion of the partner network and the attraction of strategically important players in the global direct investment market to Kazakhstan. However, one of the key ones is undoubtedly the commitment to ESG standards. ESG approaches are based on the principles of sustainable development, namely environmental protection, social development and corporate governance According to PricewaterhouseCoopers research, 79% of investors pay great attention to how the company manages the risks and opportunities associated with ESG when making investment decisions. 68% of respondents use ESG ratings and ratings when exploring potential investment opportunities. The analysis showed that in the US alone, assets under management focused on ESG grew by about 5 trillion US dollars from 2018 to 2020, and the global impact investment market - a segment of the sustainable investment market focused on positive results regardless of profitability — is currently estimated at $ 715 billion. Thus, focusing on global trends in adherence to the principles of responsible investment and their impact on the sustainability and profitability of projects, since 2021, KCM has been actively working to integrate ESG approaches into investment processes. The Company has made changes to the Company's investment policy in terms of evaluating projects for compliance with ESG standards and monitoring mitigation of ESG-related risks during the project lifecycle. In order to make a full-scale transition to the "responsible investment" model, the KCM is working on the issue of joining the UN Association on the Principles of Responsible Investment (UN Principles of Responsible investments). Membership in this association will contribute to building up the internal competencies of KCM in the field of responsible investment and exchange of experience with international institutional investors and other financial organizations. At the end of 2021, the UN PRI signatories included 3,358 companies with total assets of about $120 trillion. Environmental protection and social responsibility issues are of great importance in making investment decisions for KCM, which is clearly evident from the structure of the Company's portfolio. KCM is constantly increasing its portfolio of "green" investments, thereby contributing to the fulfillment of the obligations of the Republic of Kazakhstan adopted under the Paris Climate Agreement, as well as to achieve the goal of ensuring carbon neutrality by 2060, announced by the Head of State of the Republic of Kazakhstan at the UN Summit on Climate Ambitions in December 2020. Today, KCM's portfolio includes 4 implemented projects in the field of renewable energy sources with a total capacity of 200 MW. In 2019, KCM financed the construction and commissioning of the Baikonur solar power plant with a capacity of 50 MW in the Shieli district of the Kyzylorda region, as well as the Kengir solar power plant with a capacity of 10 MW in the Karaganda region in January 2020. Another significant project that received financial support from KCM is the construction of the Astana EXPO-2017 wind power plant with a capacity of 100 MW for wind energy conversion, implemented by TSATEK Green Energy LLP. The implementation of the project provided the annual consumption of more than 10,000 families with environmentally friendly energy. The wind power plant saves more than 79,000 thousand tons of conventional fuel per year, reduces greenhouse gas emissions by 230,000 tons per year, which is equivalent to the volume of emissions of 113,000 cars. In making investment decisions, KCM gives preference to projects whose implementation will contribute to improving the quality of life of the population and the development of regional infrastructure. Thus, in 2019, KCM financed a gasification project in Nur-Sultan and the northern regions of the country, following the results of the implementation, 171 urban and rural settlements were connected to the gasification system. In 2022, KCM provided financingKeruen-Medicus LLP for the construction of a maternity hospital in Bostandyk district of Almaty. The new perinatal center with a total area of 4,000 m2 will include a polyclinic and diagnostic unit, maternity and postpartum departments, operating rooms and pediatric and adult intensive care units. One of the major successful projects that have an impact on improving the infrastructure of the regions and ensuring food security of the country was the project for the construction of the Makinsky Poultry Farm (MPF) of the Aytas group of companies. Following the completion of the construction of the MPF in 2018, a year later the poultry farm reached its full design capacity. The result of the support provided by the KCM was not only an increase in the capacity of poultry meat production to 100 thousand tons per year and a decrease in its imports to Kazakhstan, but also the creation of more than 800 new jobs. Now Aytas group of companies occupies about 25% of the total domestic market of the country. It is important to note that Aytas Holding invests large resources in the development of the regional ecosystem, carrying out important social and charitable initiatives. At the same time, KCM is working on creating an effective system of financing micro and small businesses, as well as the agro-industrial sector (AIS), with the involvement of credit partnerships. Today, the network of credit partnerships has 205 participants and covers all regions of Kazakhstan, which allows providing effective targeted support to representatives of the MSME and the agro-industrial sector. The creation of an apex fund for credit partnerships will expand the funding of rural producers and give more opportunities to attract new market investments from outside. The well-coordinated work and results of the company directly depend on the level of corporate governance. In its activities, KCM adheres to the principles of the UN Global Compact, including in the field of human rights, labor relations and anti-corruption, special attention is paid to the issue of creating equal working conditions and career opportunities, as well as ensuring gender equality (58% of KCM employees are women, 41% of them hold senior positions). In 2021, an assessment of the corporate governance system was carried out according to three main components: Structure, Processes, Transparency, aimed at fulfilling the criteria provided for in the KCM Corporate Governance Diagnostic Methodology. According to the results of the diagnosis, the assessment of compliance of the KCM with the requirements of the best world practices amounted to 88.6%, which shows the results of activities to improve the level of corporate governance (there is an increase in the rating from 77.7% compared to the previous diagnosis of corporate governance in 2019). After 15 years, it is safe to say that KCM has strengthened its position as one of the key players in the field of private equity, becoming a catalyst for the development of the direct investment market in Kazakhstan. The results achieved to date are the fruits of effective joint work of the KCM team, partners and customers of the company.