«Group of Companies Allur» JSC
Kaz Rus

Transnational investor has acquired the shares of the largest Kazakhstan automaker

December 11
Today on Industrialization day transnational company China National Machinery IMP. & EXP. CORP. (СМС), a member of China General Technology Group (Genertec), has signed an investment agreement on acquiring the shares of the largest Kazakhstan automaker SaryarkaAvtoProm LLP, a member of «Allur» Group of Companies» JSC.
The official signing ceremony has been held in the presence of Mr. Mamin Askar, the First Deputy Prime Minister of the Republic of Kazakhstan, during the visit of delegation from China to Kazakhstan.

The ceremony has also been attended by Mr. Zhang Xiao, the Ambassador of the People's Republic of China to the Republic of Kazakhstan, Mr. Kasymbek Zhenis, the Minister for Investments and Development of the Republic of Kazakhstan.

The investment agreement signed by the companies has become one of the most anticipated events in the Kazakhstan automotive industry. Moreover, the project is included to the TOP-51 strategic priority projects being jointly implemented by Kazakhstan and China.

The investor holds an interest in the production development, in increasing the production outcome, localization, i.e. implying the development of additional industries - the production of automotive components.

- «Allur» Group of Companies» JSC is one of the hundred leading enterprises substantially supporting the program of rehabilitation of Kazakhstan national industry. The company has a great vehicle manufacturing experience, occupies a significant market share, and also has strong competitive advantages. In September 2017, considering a long-term fruitful cooperation, jointly with JAC Motors, CMC officially launched a project to acquire the shares of «Allur» Group of Companies» JSC. More than one year of careful work has finally reached a brilliant joint cooperation outcome. Successful implementation of the shares acquiring project has strengthened the hope for the extended and even deeper cooperation with Kazakhstan in future, - said Lu Yiming, Chairman of the Board of China General Technology Group (Genertec) during his speech at the official signing ceremony.

Considering the upcoming joint venture development activities, the partners discussed a possibility of increasing the production outcome up to 100,000 units and reaching 50% of local content.

The total direct and attracted investments to the joint venture comprise around $1.1 billion - the amount required to increase local content, develop the production of automotive components, and enter the markets of Customs Union countries.

Being supported by the transnational investor, the largest Kazakhstan automaker will be able to significantly increase the production localization level, expand the brand portfolio, and introduce the advanced technologies.

One of the key areas to be implemented within joint venture is a manufacturing of electric vehicles, electric buses and the creation of electric charging stations infrastructure in Astana and Almaty. This project is being under careful control of the Government. Earlier, Mr. N.A. Nazarbayev, the President of Kazakhstan, denoted the development of the electric vehicles production as a priority objective for Kazakhstan automakers.

Additionally, the partners discussed such issues as improving the skills and competence of automotive personnel, and creating new jobs in the car making industry.

SaryarkaAvtoProm LLP has been producing vehicles since 2010, and is currently the only automaker having CKD-production of passenger cars in Kazakhstan (CKD production including the body welding, painting and assembly). The car with the “highest” local content is JAC S3 (36%), being CKD-produced jointly with JAC Motors.

By the end of 2017 the automobile plant SaryarkaAvtoProm produced 51% of products of the entire Kazakhstan automotive industry in monetary terms. This year the plant increased the production outcome to 11,000 vehicles, exceeding that of the same period last year by 132%. Currently 1,500 employees are working in the Kostanay engineering industry. The average salary is around 155,000 KZT.
For reference:

China General Technology Group (Genertec)
The Chinese state conglomerate comprises such areas as mechanic engineering, pharmaceutics, engineering labour contract, construction and real property, as well as technical consulting. The company is engaged in the engineering and construction sector. Its largest subsidiary in this sector is China National Machinery Import and Export Corporation (CMC).

China National Machinery IMP. & EXP. CORP.
At the moment China National Machinery IMP. & EXP. CORP. is a large international project developer, a contractor in providing services to project management and a supplier of services for the automobile industry. CMC is a member of China General Technology Group (Genertec).
СMС has close ties with the enterprisers from more than 160 countries, such as Russia, Japan, Australia, and countries of Europe, Central Asia, Near East, Southeast Asia and South America.

China Anhui Jianghuai Automobile Co., Ltd (JAC)
Leading Chinese manufacturer of cars, passenger and commercial vehicles. The company entered TOP-100 global industrial enterprises: as only in China, the production output of company’s factories is 700,000 vehicles a year.
Today JAC Motors has its own research and development center (Hefei, China). In 2005 and 2006, the company opened similar centers in Turin and Tokyo focusing on the design development and new technical solutions.

Bank of China International (China) Co., Ltd.
Bank of China International (China) Co., Ltd. is the investment banking arm of the Bank of China Group. It is a leading financial advisory service provider boasting for its specialty in cross-border M&A transactions and its deep connection with companies in China as well as those in the countries where Bank of China branches have presence. BOCI enjoys good reputation with handful of successfully executed cross-border M&A cases across the Eurasian Continent.