“Kazakhstan is Hungary’s most important partner in Central Asia, and in line with the two countries’ capabilities agriculture is an extremely important sector”, the Ministry of Foreign Affairs and Trade’s Parliamentary State Secretary, László Szabó, said in Budapest at the signing of the agreement on establishing a Kazakh-Hungarian Agricultural Investment Fund.
At the official signing of the agreement between Eximbank, KazAgro National Management Holding JSC and ADM Capital, Mr. Szabó said he hoped the agricultural fund would provide3 impetus to economic relations between the two countries, adding that he would not be surprised if the current level of trade flow tripled within 2-3 years.
There are development opportunities in several sectors, including production, processing, transport and logistics, he pointed out, and stressed that the two countries are not competitors because there are many areas in which they can complement each other’s experience, knowledge and products.
According to the information provided at the press conference, the investment will begin operating with a budget of 40 million US Dollars, representing participation of USD 20 million each on the part of Eximbank and KazAgro.
Kazakhstan’s Ambassador to Hungary Nurbakh Rustemov said the fact that the fund planned to attract 100 million dollars from investors was encouraging and added that he hoped cooperation would result in the realisation of concrete results before the end of this year.
Eximbank CEO Zoltán Urbán told the press that a new product, equity financing, had been added to the bank’s palette, the first important element of which is the Kazakh-Hungarian Agricultural Fund.
Eximbank increased its loan portfolio by 30 percent in 2015 and plans a similar level of expansion this year, he said. The ratio of small and medium-.sized enterprises also saw a further increase; 84 percent of the bank’s clients are now SMEs, he added.
Deputy CEO of KazAgro Aidarbek Khojanazarov said Kazakhstan was one of the most interesting and important countries with respect to agricultural investments.
The country has a production area of 222 million hectares, compared to which agricultural production realised only a relatively low level of 12.5 billion dollars last year, he said, pointing out that the level of efficiency could be significantly increased.
Mr. Khojanazarov highlighted the fact that Kazakhstan is neighbour to China, Russia and Iran, which together represent a market of some 2 billion people, and accordingly the country’s economic potential should not be underestimated.
KazAgro has wide-ranging knowledge and experience with relation to Kazakh agriculture; the organisation has 49 thousand clients and is associated with 80 percent of the country’s farmers, he added.
ADM Capital’s European Director and one of the company’s founders, Anthony Stalker, told reporters that ADM has been operating in Central-Eastern Europe, Turkey and Kazakhstan since 2015, and is now one of the latter’s largest independent asset management companies.
The Hungarian Ministry of Agriculture’s Deputy State Secretary for Agricultural Economy, Zsolt Feldman, spoke about the fact that the companies operating in the Hungarian food economy are in international demand in view of their expertise and experience and stressed that further growth requires the appearance of new elements in the support provided to enterprises, noting that the lack of equity financing had been one of the bottlenecks so far.
According to the statement provided at the press conference the Fund will primarily be investing in Kazakh agriculture sector enterprises within the fields of production, processing, storage and shipping and in the milk products, cereal, fruit, vegetable, fish and meat sectors. According to the statement, it is important that these enterprises are capable of achieving an annual rate of return of 15-20 percent with the right sources of extra capital and the involvement of external advisory services.
The Fund’s investment decisions and daily operations will be performed on the basis of market and trade criteria by ADM Capital as independent asset manager, the statement reads.