$1.5bn Kazakhstan FoF does first deal

Aureos Capital has become the first recipient of capital from a $1.5 billion fund backed by the Kazakhstan government as it attempts to stimulate private equity activity in the region.

State-backed Kazakhstan fund of funds Kazyna Capital Management has made its first investment from a planned $1.5 billion (€1 billion) fund, according to the firm’s chairman Abay Alpamysov.

(The country) has double-digit growth, nearly no one’s there – it’s what they call a no-brainer

Sev Vettivetpillai

Alpamysov said the fund has $400 million from the government of Kazakhstan which it is aiming to commit within a year. The fund will have $1.5 billion to deploy over the next three years, he said. The government may commit even more funds over the next year dependent on the success of the initiative, he said.

Alpamysov said: “Kazyna will attempt to stimulate private equity firms to fill the liquidity gap caused by problems in the banking sector.” The Kazakhstan banking sector has significant problems due to the lack of available loans from the global credit markets, because of this the government wants to stimulate private equity to provide growth capital, he said.

Sev Vettivetpillai

The fund has invested $10 million in small and medium enterprise specialist Aureos Capital’s first Central Asia Fund which has had its initial close on $50 million, according to an Aureos managing partner Talgat Kukenov. Aureos is looking to raise $100 million for a final close in June 2008 although Kukenov said this is not a hard cap.

Kazakhstan:
no-brainer

The Aureos fund will look to commit 70 percent to Kazakhstan, Kukenov said. It will also invest in Azerbaijan, the Kyrgyz Republic, Georgia, Tajikistan, Turkmenistan and Uzbekistan.

Sev Vettivetpillai, chief executive of Aureos, said of his firm’s Kazakhstan fund: “(The country) has double-digit growth, nearly no one’s there – it’s what they call a no-brainer.”

Vettivetpillai is in attendance today at our conference: The 3rd Annual Emerging Markets Private Equity Forum