National Innovation Fund Of Kazakhstan Industrial-innovative strategy of Kazakhstan: new opportunities for the US business September 9, 2005 San Diego

2 Established May 30, 2003 Charter capital $ 150 million ShareholderGovernment of Kazakhstan (100%) Associate member of the European Private Equity and Venture Capital Association and Singapore Venture Funds Association National Innovation Fund Republic of Kazakhstan

3 We:  Create venture funds together with domestic and foreign investors  Finance promising applied R&D  Make equity investments in innovation projects and infrastructure for innovations  Establish technology business incubators and centers of excellence Increase innovative activity in Каzakhstan Support and promote development of high technologies Our mission: How we achieve our objectives National Innovation Fund Republic of Kazakhstan

4 Development Institutions in Kazakhstan: Kazakhstan Investment FundKazakhstan Investment Fund Kazakhstan Development BankKazakhstan Development Bank Export Insurance CorporationExport Insurance Corporation National Innovation FundNational Innovation Fund Center for Marketing andCenter for Marketing and Analytical Research Center for Engineering and Transfer ofCenter for Engineering and Transfer ofTechnology Kazakhstan Contract AgencyKazakhstan Contract Agency Corporate Investors Research Institutes, centers of excellence Universities, laboratories, IC 2, MIT, CRDF International Financial Organizations Kazakhstan & Foreign Governments National Academy of Science National Innovation Fund Republic of Kazakhstan

5 Venture Funds Innovation projects Infrastructure conducive to innovation Applied research and development Types of investments 50%35%10%5% Investment strategy of the Fund $5 mln $0.3 mln$0.25 mln $10 mln Investment limits National Innovation Fund Republic of Kazakhstan

6 Priorities of the Fund Information technology Alternative sources of energy Biotechnologies, pharmaceuticals New materials and nanotechnology Technologies for hydrocarbon industries and related services National Innovation Fund Republic of Kazakhstan

7 z Investment policy is in line with the Fund objectives The Fund is a minority shareholder (up to 49%) Professional management team N ew technology or advanced existing product/technology Project is commercially viable Minority interest of the Fund (up to 49% of chartered capital) Well defined time-horizon for investment Staged financing Qualified management Principles of investment in venture funds: Principles of investments in innovation projects: National Innovation Fund Republic of Kazakhstan

8 1 st Stage 2 nd Stage Total Capital Areket VC Fund$5 mln. $10 mln.$21 mln. Advant VC Fund$5 mln. $10 mln.$21 mln. Centras VC Fund$5 mln. $10 mln.$21 mln. CASEF Private Equity$2 mln $6.6 mln.$17.6mln. Wellington Partners$10 mln.$180mln. Halyk Private Equity $ 20 mln. Kazakhstan-Baltic VC Fund$ mln. Kazakhstan-Asian Technology Fund$ mln. Kazakhstan Technology VC Fund$ 20 mln. The Fund’s Investments in Venture Funds Our plans: Our current portfolio: joined partner founder National Innovation Fund Republic of Kazakhstan

9 The NIF in the world venture funds system «CASEF» (in cooperation with IFC, SECO, SEAF) European Venture Funds Association NIF «Wellington III Tech. Fund L.P.» (Germany) National Innovation Fund Republic of Kazakhstan Singapore Association of Venture Funds

10 Telecommunication Space engineering Pharmaceutical industry Mining/gas service industries Our current portfolio: 5 projects for $72.5 mln. in: Our plans: 16 projects for $36 mln. in : Software development Hi-Tech IT technologies Telecommunication Pharmaceutical/bio-technologies The Fund’s Investments in innovation projects National Innovation Fund Republic of Kazakhstan

11 Perspective areas for cooperation: Wind power generation industry Kazakhstan’s wind energy potential capacity - 1.8bln. kW-hr Pilot project on construction of the first wind power station in the Jungar Gate in the South-East of Kazakhstan Max. capacity - 5.5mWt. Total cost of the pilot project - $5.5 mln. UNDP - $1.0 mln. NIF - $2.7mln. US/EUN investors - $1.8 mil Second stage - $ 170.0mln. The winner gets a contract for guaranteed purchase of electric power for a max. price of 3.5 cents/KW/hr. National Innovation Fund Republic of Kazakhstan

12 2 stage (commercial phase) – drilling and exploration of 110 commercial wells Total Cost: $ mln, duration: 25 years Fund: 35% ($7 mln) Petrol Total Establishment - 20% ($4 mln); US/EUN investors - 45% ($9 mln). Operator: Schlumberger STAGES: 1 stage (pilot phase) – drilling of 6 pilot wells Total Cost: $13-20 mln, duration: months Perspective areas for cooperation: The Methane Project (Karaganda, Central Kazakhstan) National Innovation Fund Republic of Kazakhstan

13 Perspective areas for cooperation: Kazakhstan pharmaceutical market - $518 mln Share of domestic pharmaceutical industry – 9% Production of antibiotics in Stepnogorsk, Central Kazakhstan. Total project cost - € mln. Start of industrial production year Other perspective projects includes: - Production of anti tuberculosis medications – $20 mln; - Production of bio-degradable packaging – up to $40 mln; - Production of insulin – up to $150 mln. National Innovation Fund Republic of Kazakhstan Pharmaceutical Industry

14 Perspective areas for cooperation: Total area – 340 hectares Free economic zone Includes 4 clusters: 43 ongoing projects with the leading high tech companies National Innovation Fund Republic of Kazakhstan IT City “Alatau” - Manufacturing - Training - Apartments & leisure - Commerce We offer US companies partnership in managing the IT city and developing high tech projects

15 Collaboration with the US: Joined R&D program with CRDF Center of Excellence with the World Bank Two business incubators with the IC2 at Austin, Texas Flagship Venture Funds 2004, LP National Innovation Fund Republic of Kazakhstan

16 Thank you 26A, Abay avenue, Almaty, Republic of Kazakhstan Tel: Fax: Web-site: