Kazakhstan SWF invites global equity managers aboard

The $23 billion National Oil Fund of Kazakhstan, an economic stabilisation fund built from surplus oil revenues, is seeking external active and passive global equity managers as it pumps money into the domestic economy in an attempt to offset the impacts of the financial crisis.

The fund, founded in 2000, has requested proposals from large institutional firms to manage active and passive mandates of about $200 million. The tender document states that the fund aims to appoint managers which can deliver sustainable returns with low risk and provide adequate liquidity.

It is the first equity manager search that the sovereign wealth fund has undertaken, top1000funds.com understands. According to its June 5 financial statements, the fund held $19.8 billion in international reserves and $2.3 billion in gold.

The fund requires applying managers to hold an amount of funds under management equal to at least $50 billion, and have 10 years of experience in managing mandates.

The managers must also have at least $1 billion of client money invested the same way prescribed by the mandates on offer. It also asks for details of the capital market inefficiencies that managers will attempt to exploit.

The oil fund is managed within the National Bank of the Republic of Kazakhstan. Its assets have sunk more than 15 per cent from $ 27.5 billion in December 2008.

Kazakhstan authorities are drawing on the fund as the domestic economy becomes increasingly stressed by the global financial crisis.

In 2008 the Kazakhstan government announced that it would pump $10 billion from the National Oil Fund into the country’s banking, building and agricultural industries, and into the small-to-medium business sector.

In March, a further $4 billion was committed to the stimulus plan and injected into the banking system.

The fund grew steadily since its inception, a beneficiary of higher oil prices. But the financial crisis and steep drop-off in commodity prices have stymied its expansion.