Kazakhstan’s government will invest in start-ups across south-east Asia as part of efforts to diversify central Asia’s largest economy away from oil and gas, where prices have been slammed by the coronavirus pandemic.
The country’s state wealth fund, Baiterek National Managing Holdings, will be the anchor investor in a vehicle run by Singapore-based Quest Ventures. The fund has also been backed by Temasek Holdings, Singapore’s state investment company.
At $50m, the fund is small but it forms part of a broader push to create an economic corridor between central and south-east Asia. Adil Nurgozhin, chairman of Baiterek subsidiary QazTech Ventures, called the deal an “important step” in connecting the regions’ economies.
Kazakhstan, sandwiched between regional powers China and Russia, is looking to diversify its portfolio investments into different parts of the world, according to people familiar with the situation.
The move into venture capital comes as oil-rich economies, such as those in the Middle East, have sought to broaden their revenue sources against a backdrop of volatile crude prices and a broader shift away from fossil fuels.
Oil and related industries make up about 40 per cent of Kazakhstan’s gross domestic product and its economy has been hit by a recent slump in crude prices and the coronavirus outbreak.
SoftBank’s woes, coupled with a fall in start-up valuations following the failed initial public offering of office sharing company WeWork last year, have prompted some big investors to turn to alternative venture capital players. “Post WeWork, investors are turning to experienced operators to identify and guide start-ups,” said Quest Ventures partner Jeffrey Seah.
The Quest Ventures fund will invest in start-ups in countries including Vietnam, Indonesia and the Philippines. “It will be about building a quality business rather than [attracting] high valuations,” he added.