Kazakh Wealth Fund Said to Weigh Acquisition of Kazzinc Stake

Dec 24. Bloomberg

By Nariman Gizitdinov

Kazakh Wealth Fund Said to Weigh Acquisition of Kazzinc StakeKazakhstan’s sovereign wealth fund is considering buying into metals producer Kazzinc after Glencore International AG cut a planned purchase by half this year, according to two people with knowledge of talks.

Samruk-Kazyna, as the wealth fund is known, hasn’t decided on bidding for the remaining shares that Glencore doesn’t hold, the people said, without giving price guidance and asking not to be identified because the talks are private. Astana-based Samruk-Kazyna didn’t immediately respond to requests for comment by phone or e-mail. Kazzinc shareholder Verny Capital, in which billionaire Bulat Utemuratov is an investor, declined to comment.

The deal would give Kazakhstan ownership in the only domestic non-ferrous metals producer fully controlled by private investors, following its entry this year into the BG Group Plc (BG/) and Eni SpA-led Karachaganak venture, which had been the only major oil development without state participation. Samruk-Kazyna gained assets accounting for about half of Kazakhstan’s economic output after bailing out banks and companies hurt by a financial crisis in 2007 to 2009.

Glencore, planning a $33 billion takeover of Xstrata Plc (XTA) in South Africa, renegotiated a deal to increase its holding in Kazzinc in September. The Swiss trader agreed to buy 18.9 percent of Kazzinc from co-owner, Verny Capital, for $1.4 billion, raising its stake to 69.6 percent. That is less than half the 48.7 percent it initially agreed to acquire from Verny in April last year.

Following the close of the deal, Verny Capital held almost 2.5 percent of Glencore and got $400 million in cash, JSC Halyk Finance said in October.

Utemuratov, a former senior official in the presidential administration, has a fortune of about $1.5 billion based on his Kazzinc, real estate and banking holdings, Forbes magazine estimated in March.