Investment Policy of “Baiterek” Holding: Goals, Objectives, Development
Baiterek Holding has launched a new Investment Policy to be implemented. Its goal is to ensure efficient and transparent investment activities that contribute to the sustainable socio-economic development of the country.
The updated document was developed and adopted based on the Decision of the Holding’s Board of Directors in accordance with the state development programs. Thus, general directions and principles of the company’s and its subsidiaries’ investment activity were set, where export support was identified as one of the key priorities.
The new edition has significantly expanded the provisions of the Policy’s previous edition in four key blocks.
First, it identified six basic principles that set the vector for all the investment activities of the Holding and its subsidiaries. This is a focus on projects that contribute to the sustainable socio-economic development of Kazakhstan, as well as support private sectors of the economy. In addition, the document defines the priority of projects in financing of which commercial institutions are not interested due to their capital capacity and long-term payback periods, but which are contributing to the creation of a multiplier effect for the national economy. Moreover, the aspiration for break-even point and application of ESG (Environmental, Social, Governance) international principles, which is a set of principles of environmental efficiency and environmental protection, social orientation and good corporate governance, are ensured. The introduction of ESG standards will allow increasing attraction of Kazakhstani projects for foreign investors.
Second, the concept of the Development Index has been introduced as a tool to prioritize projects in terms of providing projects with more favorable financing terms. The index allows identifying the most significant socio-economic projects that can contribute and influence development of the country, as well as provide such projects with the most favorable conditions. The key point is the fact that the projects with a low level of the Development Index cannot receive funding from government sources.
At the same time, a project with a high Development Index should correspond to the priority industry defined by state programs, enable increase in labor productivity, assume a significant share of export in production and increase the volume of output per unit of invested funds. In addition, the priority is focused on the projects of private sector of the economy.
Third, the new edition clearly differentiated responsibilities between the Holding and its subsidiaries, which made it possible to build transparent relations between them. The main role of subsidiaries remains the same: implementation and maintenance of the current process of financial support provision, while the Holding determines the strategic vector of subsidiaries’ investment activities and the focus in providing support tools, as well as monitors them for the effectiveness of financial support being provided.
Fourth, the Investment Policy defined and detailed financial instruments that can be used by subsidiaries, as well as established a clear approach to determining the terms of financing and pricing.
Based on the results of support tools diagnostics, the need to identify some limitations and additions that will allow the Holding’s and its subsidiaries’ investment activities making more focused has been identified. For instance, clarifications in the issues of cooperation between subsidiaries in the joint financing of projects have been introduced, as well as the issues of financing for non-residents who purchase Kazakhstani products have been resolved, and the focus on export development has been determined.