The volume of mergers and acquisitions in Kazakhstan over the past decade amounted to about 45 billion USD

The volume of M&A transactions (mergers and acquisitions) over the past 10 years has reached approximately 45 billion USD. This information was disclosed at the Astana International Financial Centre (AIFC) during the presentation of a comprehensive report on the direct investment market in Kazakhstan.

The report, a collaborative effort between Qazaqstan Investment Corporation, a subsidiary of the Baiterek National Management Holding, and the international consulting company Baker Tilly, involved an in-depth analysis of the current state of the direct investment market in Kazakhstan spanning the last decade. The research aimed to identify key participants and factors, drawing insights from the experiences of foreign markets and successful case studies.

Delivering a welcoming speech, Yerbolat Zholat, Chairman of the Board of Qazaqstan Investment Corporation JSC, emphasized that a similar analysis was last conducted in 2019, creating a gap in analytical information regarding the growth and development of the direct investment market.

“The lack of available data acts as a barrier to decision-making for investors and industry participants. Therefore, QIC as a driving force for the development of the private equity market in Kazakhstan decided to analyze the state of markets in the countries of the region. Together with Baker Tilly, extensive work was done to collect and analyze data reflecting the dynamics and prospects of the private equity market. I am confident that the report will become a valuable source of information for investors, both domestic and foreign, and will guide them when making investment decisions,” noted Y. Zholat.

As per the report's findings, out of the total 45 billion USD, approximately 4.8 billion USD accounted for transactions involving private equity funds (PEFs) and family offices operating on the "private equity" principle. The volume of M&A transactions exhibited significant variation between 2012 and 2022, totaling 360 disclosed transactions in shares and convertible instruments, amounting to 49.7 billion USD (inclusive of follow-on investments). Consequently, the average number of transactions conducted annually during this period was 36, with an aggregate value of 4.9 billion USD.

The most active transactions were conducted in the financial sector, as well as in sectors associated with the production of energy resources and materials. Notably, the activity of private equity funds (direct investment funds) and venture funds, both domestic and some foreign entities, has seen a significant increase, reflecting a growing interest in the potential of Central Asia as a region. Over the reviewed period, the average annual number of Private Investment Fund (PIF) transactions was 7.5, with an average transaction amount of 65 million USD. The median transaction value stood at 9.15 million USD, and the modal value was 6 million dollars. In total, 88 transactions were executed within the scope of PIF during this period.

As part of the report presentation, Temirlan Mukhanbetzhanov, acting Chairman of the Board of the AIFC Authority, discussed the asset management market in the AIFC and underscored the significance of the prepared report for Kazakhstan: “A study conducted by Qazaqstan Investment Corporation and Baker Tilly showed that the private equity market has been on the rise in the last few years, and an investment culture is gradually emerging in the country working with private capital. What is important: Kazakhstan has created the necessary legal environment for structuring funds and direct investment transactions, which corresponds to generally accepted world practice. If previously such funds and transactions were mostly structured through foreign jurisdictions, today we see that more and more Kazakh funds and companies are doing this within the framework of the law and regulation of the AIFC. In addition, I believe that it is important to develop the direct investment market on a regional scale with an eye on the Central Asian region. This is evidenced by the results of a survey conducted as part of the study. The Central Asian market as a whole is much more interesting for global investors than an individual country. And again, the AIFC jurisdiction can become an “entry point” for such investors thanks to a legal system that is familiar and understandable to them.”

The total assets under management (AUM) of AIFC management companies, including the assets of investment funds, amount to 1 066 million USD. The AIFC offers a comprehensive platform for the asset management and wealth management market for individuals, meeting the requirements of international and local management companies. There are 34 management companies registered in the AIFC with a license to manage investment funds.Thirty-seven investment funds are registered, with 33 funds opened in the form of an investment company and 4 funds in the form of a limited partnership. The assets of investment funds under management exceed 600 million USD.

The conducted research provides valuable information for domestic and foreign investors, presenting the results of the changed industry landscape and strategic prospects. You can view the full version of the report by following this link. 

Reference:

Astana International Financial Centre (AIFC) is an independent jurisdiction with a favourable legal and regulatory environment and developed infrastructure for starting and doing business, attracting investments, creating jobs, and developing Kazakhstan's economy. www.aifc.kz

Qazaqstan Investment Corporation JSC is a fund of private equity funds created in 2007, with the main mission of developing private equity infrastructure in Kazakhstan to promote sustainable economic development. It is a subsidiary of Baiterek National Holding JSC. https://qic.kz/ru.