## GIMV KAZAKHSTAN POST-PRIVATIZATION FUND 

 

### December 3, 1999

 

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INTERNATIONAL COPYRIGHT, U.S. AND FOREIGN COMMERCIAL SERVICEAND U.S. DEPARTMENT OF STATE, 1999. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

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by Ainash Mukanova

 

Opportunities exist in Kazakhstan for U. S. firms to investin small and medium-sized companies in which one equity investment partner isGIMV Kazakhstan Post-Privatization Fund (KPPF), a venture capital fund managedby a Belgian investment company and created with funding from the European Bankfor Reconstruction and Development (EBRD).  GIMV was originally capitalized with 30 million Eurodollarsprovided by the EBRD and a further 3 million Eurodollars co-invested by GIMV;the fund currently has 18 million to invest.  GIMV KPPF is also supported by a technical assistance grantfor project consulting services of 20 million Eurodollars from the EuropeanUnion’s technical assistance program. 

 

The KPPF began operations in Kazakhstan in April, 1996, andhas since invested in a total of six start-up and existing companies, includingventures exclusively with Kazakhstani enterprises as well as with partners fromthe U.S., United Kingdom, France, and Belgium.  One of its equity investments is in FoodMaster, aU.S.-Kazakhstani JV in dairy and juice production, packaging, anddistribution.   Otherinvestments include a start-up paint factory, a mobile trunk radio company, apoultry farm, a water desalination and packaging facility, and a cerealprocessing facility.

 

**Target sectors**  for future investments include bottling(especially high-quality glass bottling); brewing and wine production, cabletelevision, confectionery, distribution, warehousing, food processing(especially meat packing and cheese), franchises, packaging (especiallycardboard packaging and high-quality consumer packaging); pharmaceuticals(including food supplements and herbals), information technologies; upstream/downstreamoil services companies; and building construction materials. 

 

**Target companies**for investment are small and medium-sized companies in Kazakhstan, whose stateownership does not exceed 33 percent. An attractive formula for investment for future projects is one-thirdownership each by KPPF, a foreign partner, and a local company.   KPPF can invest between 300,000to 500,000 Eurodollars in a single project; however, it cannot own more than 55percent of the shares in any company (49.9 percent EBRD, 5 percent GIMV).  Although KPPF primarily invests inequity capital, it may also give supporting loans and can provide long-termdebt financing for its invests with a one to two-year grace period.  The fund seeks a good overall rate ofreturn on its total equity and debt investment in any one company.  KPPF’s criteria for investment in alocal company include a strong management team; significant growth prospectsfor products/services; local production/import substitution; well-recognizedbrands with strong lead market position; good marketing and distribution; and aforeign, strategic partner.  

 

Example: One of KPPF's major projects is the Ust-KamengorskPoultry Factory (UKPF) which is located in the village of Molodezhny, about20km far from Ust-Kamenogorsk.  InJanuary 1998 UKPF received an equity and loan investment from the GIMVKazakhstan Post-Privatization Fund. Within the first 6 months of 1999, UKPF produced 1,930 tons ofmeat.  In the second half of the1999, the company is planning to produce about 3,500 tons of meat.  To improve the quality of produced feedand to reduce the cost of feed, UKPF is in the process of building afeed-mill.  Today the constructionof the metal frame is complete, the building is being extended, andinstallation of the equipment has been started.  It is expected to be ready in December 1999.  For this project the KazakhstanPost-Privatization Fund , as of December 1999, is seeking a U.S. company withrelevant financial experience to operate/manage the facility and/or to becomeco-financier.                   

  

For more information on the project and KPPF, pleasecontact:

 

U.S. Commercial Service

531 Seyfullin Prospect, 3rd floor

Almaty 480091, Kazakhstan

Tel:  7-327258-79-16/7

Fax:  7-327258-79-22/3

E-mail:  [email protected]

Contact: Julie Snyder, Senior Commercial Officer

         Natalia Antonenko,BISNIS Coordinator

 

GIMV Kazakhstan Post-Privatization Fund

64 Zhibek Zholy Street

Almaty 480002, Kazakhstan

Tel: 7-3272 33-13-57, 33-57-46

Fax: 7-3272 50-39-09, 33-32-82

E-mail: [email protected]

Contact: Greg Curtis, Vice-President 

         Alessandro Manghi,Investment Manager