EBRD President Thomas Mirow and Kairat Kelimbetov, Chairman of SamrukKazyna, signed an agreement in Astana to set up the Fund in the very near future.

EBRD President Mirow said: "This is an important milestone in the cooperation between our Bank and Kazakhstan and takes our partnership to a new level. The new Kazakhstan Growth Fund will substantially contribute to the development of the private sector in the country by providing much-needed finance."

SamrukKazyna Chairman Kelimbetov added: "The EBRD, SamrukKazyna and JSC Kazyna Capital Management agreed on basic terms to establish a private equity fund that will be mainly focused on the financing of small and medium-sized enterprises. It is important to mention that 70 per cent of the Fund’s capital will be allocated to investment projects on the territory of Kazakhstan.

"The EBRD’s decision to create the Fund with SamrukKazyna is a clear indication of Kazakhstan’s attractiveness to international investors despite the current situation of the world economy. The establishment of the Kazakhstan Growth Fund is the start of a long term co-operation with the EBRD as a strategic partner."

With a targeted fund size of US$125 million, the Kazakhstan Growth Fund will strengthen private companies in non-extractive industries in the country by providing equity or equity-related investments and raising standards of corporate governance and transparency.

The Fund will be an active investor taking stakes in a wide variety of manufacturing and service sector private companies with a focus on food production, processing and packaging, primary extraction equipment and services, metallurgy, wood processing and textiles production and processing.

The Fund will operate on fair market principles and adopt the highest standards of corporate governance. At a later stage it is envisaged to transfer ownership of the management company to the Fund’s management team which would then raise a follow-on fund with a majority of private capital.

The Kazakhstan Growth Fund will provide companies located in Kazakhstan or in neighbouring countries but with strong links to Kazakhstan with much-needed equity to which local companies still only have limited access.

The Kazakhstan Growth Fund is a new fund in the pipeline of Kazyna Capital Management, a "fund of funds" wholly-owned by SamrukKazyna. Kazyna Capital Management will be one of the limited partners of the Growth Fund.

The EBRD’s investment in the Fund will promote institution building, a market-oriented approach and international best practice. The Bank’s investment will furthermore support the development of the private equity market in Kazakhstan. The Fund is expected to start operations during 2009.

JSC Sovereign Wealth Fund SamrukKazyna is a state-owned Kazakh holding company which owns and manages national companies in various spheres of the economy, including but not limited to oil and gas, telecommunications, transport, financial and development institutions.

Kazyna Capital Management, a wholly-owned subsidiary of Sovereign Wealth Fund SamrukKazyna, was established in 2007 to facilitate the development of the local private equity market.