Samruk Kazyna, Kazakhstan's sovereign wealth fund managing major strategic state assets with the combined value of close to US$100 billion, is overhauling its business strategy, including approaches to investments and to asset management.

New management mechanisms will soon be introduced in all of the fund's companies. As early as 2014, business processes reengineering will start in three pilot organizations - diversified transport holding Kazakhstan Temir Zholy, oil and gas company KazMunaiGaz and postal service operator KazPochta.

These measures will result in operating costs reduction of 20% by 2017, and Samruk Kazyna's economic value added will generate more than US$11.2 billion for Kazakhstan's economy.

The transformation programme was made during the Samruk Kazyna Transformation Forum held in Astana on October 6 2014.

In addition to business processes optimization, the transformation programme seeks to tap external investors, sell non-core assets and investment portfolio optimization, as well as a comprehensive reorganization and streamlining of the fund's operations. As a result, the number of companies under its management will be reduced from the current 600 to 300 by 2017. In the short to medium term, the largest companies, including KEGOC, Samruk-Energo, Kazakhstan Temir Zholy and KazAtomProm will hold initial public offerings.

Samruk Kazyna's transformation programme is a key element of Strategy 2050, an nitiative of Kazakhstan's president Nursultan Nazarbayev. "By that time, Kazakhstan should become one of the world's 30 most developed countries. To reach this goal, in the next several years we should increase productivity growth from 3.6% to 6.5%, and investment level should grow from 21.4% to 30% of GDP. These results are possible only based on a fundamental change in the country's economy, and this change must be led by Samruk Kazyna sovereign wealth fund which owns the nation's main strategic enterprises!," he stressed in his speech during the forum.

The programme also seeks a complete overhaul of Samruk Kazyna's approaches to operational management through introduction of the "commercial strategic holding" model. Internal reforms will entail three main directions - people-processes-technologies - to create an agile management structure based on modern global standards and cutting-edge technologies.

Increased capital efficiency will be a specific focus of the transformation. "Sovereign funds in other countries are generating greater revenues from the same level of investments. For that reason, our goal will be to continuously increase the value of the fund's subsidiaries through profit maximization," underscored Samruk Kazyna's CEO Umirzak Shukeev.

"Given the shift of economic gravity towards Asia, opportunities for Kazakhstan to be a regional and even global driver of economic growth are obviously expanding," international economist Nouriel Roubini said during his remarks at the forum. "In this context, the efforts of the country's leadership to create a modern and attractive development model can only be welcome. And in this model, a modernized and competitive sovereign wealth fund which effectively manages state assets is a key element," he noted.