The Strategic Advantage of Setting Up Investment Funds and Securitization Vehicles in Kazakhstan for Emerging Market Investors

As global investors seek to diversify portfolios and tap into high-growth markets, Kazakhstan is emerging as a compelling destination. The country's strategic location, robust legal framework, and innovative financial infrastructure offer unique advantages to Family Offices, Investment Funds, and High-Net-Worth Individuals (HNWIs). Investors from sectors like private equity (PE), real estate, venture capital, and hedge funds can significantly benefit by setting up investment funds and securitization vehicles (SPVs) within Kazakhstan’s Astana International Financial Centre (AIFC).

Private Equity & Real Estate Investments

Kazakhstan’s expanding economic clout makes it a magnet for private equity (PE) funds and real estate investors. In 2023, Kazakhstan's GDP grew by 5.1% year-on-year, driven by increased oil exports, manufacturing, and infrastructure development. Looking ahead, the IMF projects that Kazakhstan’s GDP will reach $354.7 billion by 2028, cementing its place as a key emerging market.

Private equity funds can target real estate and infrastructure projects in Kazakhstan’s rapidly growing urban centers. With corporate income tax exemptions until 2065 for companies in the AIFC, Kazakhstan offers favorable terms for PE funds looking to capitalize on the region's growth. Furthermore, the country’s wealth of natural resources, including oil, gas, and minerals, provides PE funds with asset-backed investment opportunities in key industrial sectors.

Real estate investors benefit from Kazakhstan's growing demand for commercial and residential property. The country’s evolving real estate market, particularly in cities like Almaty and Astana, offers stable, high-yield opportunities for institutional investors. With an estimated $18.3 billion in real estate transactions in 2023, the sector is poised for growth, further bolstered by favorable foreign investment laws.

Venture Capital & Tech Investments

Kazakhstan’s burgeoning tech ecosystem presents substantial opportunities for venture capitalists. Astana Hub, Central Asia’s largest startup accelerator, is home to over 1,400 tech startups as of 2024. The government has actively supported sectors like fintech, AI, and blockchain technology, attracting interest from international venture capitalists.

Kazakhstan’s tech sector is poised to grow significantly, driven by investments in innovation parks and digital transformation initiatives. For Family Offices and venture capitalists looking to diversify portfolios, Kazakhstan offers an ideal opportunity to partner with emerging startups and capitalize on the next wave of technology-driven growth in the region.

Hedge Funds & Public Markets

For hedge funds, Kazakhstan offers a high-growth frontier market with increasing liquidity. In September 2024, the Astana International Exchange (AIX) saw its best month ever with 18 new listings and secondary trading turnover reaching $109 million. Year-to-date turnover on the exchange is nearing $1 billion, indicating rising investor confidence and robust capital markets.

Global hedge fund managers like Stanley Druckenmiller have highlighted the importance of emerging markets for generating high returns in volatile environments. Kazakhstan's financial markets offer the perfect blend of high-growth potential and volatility, which are key factors for hedge funds.

Kazakhstan attracted $19.7 billion in foreign direct investment (FDI) in the first nine months of 2023, reflecting international investors' growing interest in the country. These figures signal that Kazakhstan is a rising star among emerging markets, with its capital markets increasingly capturing global attention.

Securitization Vehicles (SPVs) & ISIN Issuance

Setting up Securitization Vehicles (SPVs) in Kazakhstan’s AIFC enables investors to capitalize on English common law-based legal frameworks, alongside tax incentives and simplified regulatory regimes. Investors handling complex real estate, private equity, or hedge fund strategies can use SPVs to bundle assets and offer them to global markets.

The AIFC’s legal structure, rooted in English common law, provides the necessary transparency and protection for international investors, making SPVs an attractive option for asset-backed securities (ABS) and mortgage-backed securities (MBS). Moreover, ISIN issuance facilitates integration into global financial markets, enhancing the liquidity of securitized assets. The ability to issue ISINs in Kazakhstan opens doors for global trade of these structured financial products.

Neomarkets Group Ltd. , an AIFC-licensed broker, offers direct access to 15,000+ financial instruments globally, with highly competitive commission rates starting at 0.15%. This cost-effective approach further positions Kazakhstan as a strong alternative to traditional financial hubs like Luxembourg or Singapore.

Kazakhstan's Strategic Role in the New Silk Road

Kazakhstan’s strategic location along the Belt and Road Initiative (BRI) reinforces its importance as a global trade hub. The country serves as a key logistics and infrastructure node connecting China, Europe, and Central Asia, with 80% of goods from China passing through Kazakhstan to reach European markets.

Infrastructure investors like Stephen A. Schwarzman and Henry Kravis recognize the importance of Kazakhstan in global trade flows. The country’s infrastructure development, supported by the Development Bank of Kazakhstan, provides both public-private partnership opportunities and securitization potential for large-scale projects. With ongoing $40 billion infrastructure projects under the BRI, Kazakhstan offers ample opportunities for strategic investment.

Legal and Tax Benefits

The AIFC provides a tax-friendly environment, with corporate and individual income tax exemptions extended until 2065. This long-term fiscal predictability makes Kazakhstan a prime location for Family Offices and institutional investors looking to optimize tax efficiency and wealth management.

Additionally, the AIFC’s legal framework, based on English common law, ensures robust investor protection, including safeguards for minority shareholders. The streamlined currency regime and simplified visa processes further enhance Kazakhstan's attractiveness for international professionals and their families.

Conclusion: Kazakhstan as a High-Growth, Low-Cost Jurisdiction

Kazakhstan stands out as a high-growth, cost-effective, and legally secure jurisdiction for Family Offices, Investment Funds, and HNWIs. Its favorable tax regime, strategic location, and rapidly expanding financial markets make it a key player in the emerging market investment landscape. With opportunities spanning private equity, venture capital, hedge funds, and real estate, Kazakhstan is fast becoming a financial hub for international investors.

As Richard Wilson from the Family Office Club often says, successful wealth preservation hinges on diversification. Kazakhstan, with its secure legal framework and favorable tax laws, offers investors the chance to diversify portfolios across sectors and geographies, while capitalizing on a high-growth market.

Now is the time for Family Offices, Investment Funds, and HNWIs to explore Kazakhstan as a destination for portfolio diversification and capital deployment. Contact me today to schedule a video consultation and start your investment journey in Kazakhstan!

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Anthony Chernykh

Chief Business Officer at Neomarkets Group Ltd.

Investor Relations Head | Fiduciary in Capital Raising | Network Expansion for Family Offices and Funds

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