* SMEs selling to Central Asian, Chinese, European buyers
* KMG stake to be sold once oil price rebounds
* Privatisation process could extend beyond 2020
By Claire Milhench
LONDON, Sept 21 Kazakhstan's $65 billion
sovereign wealth fund Samruk-Kazyna has sold 34 small and
mid-sized companies by public auction as part of its
privatisation drive, a managing director of the fund said on
Baljeet Grewal declined to say who had bought the companies,
or how much has been raised in the first phase of an ambitious
five-year plan which will culminate in public offerings of
stakes in some of the country's biggest companies.
The oil-rich Central Asian nation was hit hard by the
collapse in world oil prices from a high of $115 in June
2014 to a trough of $27 in January 2016.
To raise money it plans to sell off hundreds of companies
held by Samruk-Kazyna in whole or in part, ranging
from the very small to behemoths such as energy producer
KazMunayGaz (KMG) and flagship carrier Air Astana.
To date, Grewal said the fund had sold 34 of the 172 smaller
"non-core" companies that have been earmarked for sale via
public auction, including helicopter company Euro-Asia Air,
which has been sold to a European company.
"The majority of these investors largely come from Central
Asia, China and Europe," she told Reuters but said she could not
disclose any buyers' names.
She added that so far no company had failed to sell, but
Samruk-Kazyna is prepared to liquidate or merge any companies
left on the shelf.
Seven large companies have been slated for public listings
from 2018-2020. As well as KMG and Air Astana, these include
railway giant Kazakhstan Temir Zholy, uranium miner Kazatomprom
and postal service KazPost.
Grewal said Air Astana would be among the first to be
listed, with the state retaining a minority stake. In other
cases, she expected a maximum of a 25 percent stake in a company
to be sold.
The KMG stake could list towards the latter part of 2018, to
coincide with an expected recovery in the oil price, she said.
She expects to see prices back up to around $55-$60 a barrel by
then, from the current $47 a barrel, as the oil glut erodes.
Minority shareholders of KazMunaiGas Exploration and
Production (KMG EP), KMG's upstream subsidiary, in August
rejected KMG's proposal to give the parent company more control
over its subsidiary and the option to sell their shares to KMG.
KMG has a 58 percent stake in KMG EP.
Grewal, who was in London to speak at an investment
conference, denied the process was a failed exercise and said
the intention was to give minority shareholders the option to
exit, given the slump in oil prices.
The privatisation process of the seven large assets could
extend beyond 2020, she said, adding: "It depends on the
consideration for the asset and the market itself."
Stakes in another 37 core companies are expected to be sold
to strategic investors - either best-in-class industry
participants or financial investors.
"We have brought in new people and have been cutting some of
the excess fat in some of our portfolio companies," she said.
"We want to create value in the companies prior to taking them
(Reporting by Claire Milhench; Editing by Adrian Croft)