Kazakhstan’s Samruk-Kazyna sovereign wealth fund is providing the investment through its wholly-owned subsidiary Kazyna Capital Management (KCM).

KCRF will be managed by ADM Capital. The Fund will focus on supporting Kazakh businesses that have been negatively impacted by the financial crisis, whether through over leverage or through an inability to access the sort of capital they require. Investment decisions will be taken independently by ADM Capital’s Investment Committee.

The Fund will invest in the same style as ADM Capital’s other closed end funds, focusing on rehabilitating operationally strong but financially distressed companies via restructuring, rescheduling, refinancing, debt-equity swaps, liquidity management or direct equity investments. It will also finance growth opportunities where alternative sources of capital are not available.

KCRF has secured a first close of US$100 million, to which the EBRD and KCM are each commiting US$49.5 million and ADM Capital is investing one per cent of the first closing. The Fund is expecting to reach second and final closing at up to US$225 million, with up to a further US$22.5 million from the EBRD and KCM as well as by attracting third party investors.

“One of the EBRD’s key priorities in the current environment is to promote sustainable economic growth in its region. This project, part of the EBRD’s crisis response, is a further step undertaken by the Bank to help viable businesses in Kazakhstan overcome the challenges brought by the crisis and kick-start recovery”, said EBRD President Thomas Mirow.

“This Fund is the first private equity fund that targets distressed assets and which will bring much needed-help for Kazakhstan business”, said Samruk-Kazyna CEO Kairat Kelimbetov. “We highly value the EBRD’s contribution to the development of Kazakhstan’s economy. There is no doubt that Kazakhstan Capital Restructuring Fund will contribute to the financial recovery of Kazakhstan small and medium-sized enterprise sector”, he added.

Robert Appleby, one of the founding partners of ADM Capital said: “The fallout of the recent financial crisis in Kazakhstan has created an environment where ADM Capital’s style of investing can flourish. We have followed the country closely for a number of years and believe that our style of investing has broad application in the Kazakh market.”

Founded in 1998 in the fallout of the Asian crisis, ADM Capital has over 12 years of experience in investing in Emerging Markets across 12 countries. With 48 people stationed in local offices in Hong Kong, Mumbai, Beijing, Istanbul and London, ADM Capital’s assets under management are now over US$1.7 billion.

In addition to KCRF ADM Capital also manages the recently launched ADM CEECAT Recovery Fund and its Asia focused Maculus Series of four closed end funds. The firm manages a liquid credit hedge fund strategy and successfully launched a “fund of managed accounts” fund targeted towards institutional investors last year.

To date the EBRD has committed over €2.7 billion in private equity and mezzanine funds operating in the region, which have raised additional resources in excess of €12 billion.

In Kazakhstan the Bank has committed to date over €2.4 billion in various sectors of the economy, mobilising additional investments in excess of €5 billion.