Kazakhstan, the Central Asian giant, is slowly but surely establishing itself as a key player on the global economic scene. Traditionally considered a former Soviet republic, Kazakhstan today is certainly close to Moscow but also closely aligned with Washington. At the European level, Kazakhstan still appears unknown to most of the population, but not to the major energy companies that have been present in Kazakhstan for several years, thanks in part to its openness to foreigners, and are active in the oil and mineral sectors. The country is undergoing a phase of significant transformation and diversification.
Photo credit: Stefano Endrizzi’s personal archive
At the heart of this evolution, the Mergers and Acquisitions (M&A) market is emerging as a crucial, and still largely untapped, driver for the growth and modernization of its companies and investment funds. This sector is obviously more developed in the Western world, but it has also encountered friction in Kazakhstan. Sectors such as finance, minerals, oil, and energy have been the most active. However, the real opportunity lies in the potential for expansion into new segments and the maturing local investment ecosystem.
M&A potential in Kazakhstan is supported by several structural and economic factors:
Despite its historical dependence on hydrocarbons, Kazakhstan possesses immense reserves of critical minerals and rare earths (uranium, copper, etc.), positioning itself as a potential Saudi Arabia for these materials, essential to the global energy transition. This unique positioning makes the country’s mining and extraction companies extremely attractive targets for global investors seeking to secure future supply chains.
Located at the heart of Eurasia, Kazakhstan is a key hub along the transport corridors between Europe and Asia. The logistics, transportation, and infrastructure sectors are expected to grow, fueling M&A transactions aimed at creating stronger and more integrated regional players, thanks in part to the Silk Road and the nearby massive Chinese presence.
The banking sector has already seen a significant wave of consolidation in the past, driven by capitalization needs and the desire to compete with foreign banks. Local stock markets, such as the Kazakhstan Stock Exchange (KASE) and the Astana International Exchange (AIX) in the AIFC, are improving liquidity and attractiveness for global investors.
At the same time, the government is actively promoting diversification, with a focus on agriculture, FinTech, and digital technology with the establishment of the Astana Financial Centre. These sectors, still fragmented and with high growth potential, offer fertile ground for buy-and-build transactions by private equity funds and strategic investors.
The Kazakh Private Equity (PE) market is still relatively young but growing. PE funds and family offices have accounted for a significant share of transactions in recent years. The role of these funds is crucial to unlocking the full potential of M&A in Kazakhstan:
Despite its potential, Kazakhstan’s M&A market is not without obstacles that must be addressed to reach full maturity.
Historical opacity and the high level of public sector participation in the economy have limited the interest of some foreign investors. Ongoing efforts to improve transparency, governance, and law enforcement are also contributing to the market’s decline.
Kazakhstan is at a turning point. The government’s commitment to improving the investment climate, combined with the country’s strategic role in terms of resources and logistics, makes the M&A market a high-potential bet.
For local companies, M&A is a means to accelerate expansion, access new technologies and markets, and compete internationally. For investment funds and global strategic players, it offers an entry point to capitalize on the growth of an economy that could benefit from a fundamental revaluation, especially in sectors related to critical minerals and digitalization.
The author is Stefano Endrizzi, an Investment Banker based in Europe.
