In recent years the economies of Central Asia have witnessed various mergers and acquisitions driven by economic restructuring, geopolitical developments and opportunities arising from regional connectivity initiatives.

Yet conventional M&A activity in the region is rarer than in East Asia, as Central Asian governments generally prefer strategic collaboration with foreign companies – rather than relinquishing full control or ownership in any sector due to the region’s economic models.

Central Asian countries have underdeveloped private sectors, with government expenditure and therefore role in the economy being relatively high in the region, on a par with many developed countries. This is because of the history of these countries as part of the centrally planned and centralised USSR. While Kazakhstan and Turkmenistan have relatively smaller state sectors, Kazakhstan still maintains many of the similar traits of its neighbours’ economies.

For instance, Kazakhstan and Uzbekistan respectively have around 6,000 and 2,000 operating state-owned enterprises (SOEs). They control important assets in the most critical industries and frequently have monopolies or quasi-monopolies across their sectors of interest. In some circumstances, SOEs also have regulatory functions, which increases their market power even further – but at the expense of the private sector.

As such, the size of the deals on a global scale remains relatively modest. In most cases, data from ClearPic.ai and Statista show the M&A market is expected actually to shrink throughout next year: by 7.64% in Tajikistan in 2025, by 8.63% in Turkmenistan by 10.85% in Uzbekistan, by 21.11% in Kyrgyzstan by 45.78% in Kazakhstan. The average transaction value of M&A per market in 2024 is the following:

• Kazakhstan: $109.70mn (8 transactions)
• Kyrgyzstan: $22.83mn (3 transactions)
• Tajikistan: $17.12mn (6 transactions)
• Turkmenistan: $28.59mn (5 transactions)
• Uzbekistan: $20.47mn (4 transactions)

This is since many actors in the region, including China, focus their presence within Central Asia less on traditional M&A and more on infrastructure investment, joint ventures and strategic partnerships across sectors like energy, transportation, and telecommunications. Through the Belt & Road Initiative (BRI), China is deepening its influence by building infrastructure and launching joint development projects rather than acquiring Central Asian companies outright. So, this will be M&A of a sort to watch out for.

China’s BRI has also deepened to beyond basic, state-led infrastructure development to a far more sophisticated programme of investment, with Chinese NGOs like the Asian Infrastructure Investment Bank (AIIB) and multilateral institutions such as the BRICS New Development bank, and the Chinese private sector, all being involved in BRI initiatives on various levels. (The distinction between the Chinese public and private sectors can be blurry, however.)

Further, the nature of BRI investment is also changing, with the focus on industrialising recipient countries by building manufacturing facilities. In Kazakhstan, in particular, various Chinese firms over the last two years have started joint projects with Kazakhstani counterparts to build car factories.

One potential factor that may change the region’s economic outlook in years to come is the recalibration of Central Asia’s relations with Russia. After the end of the USSR these countries gravitated towards Moscow economically and geopolitically. This is changing, as they are now demonstrating greater geopolitical independence and pursuing a more diverse range of partnerships with the West, China, Iran and Turkey, as well as with each other.

A large part of the impetus driving this decoupling are the Wester sanctions levied on Russia as well as potential secondary sanctions if the West deems a country or entity to be working too closely with the Russian state or Russian companies. And this has been particularly important with regards to the significant number of subsidiaries of Russian companies in Central Asia that have changed hands recently. On the other hand, the region still remains in the Russian sphere of influence in politics, security and to a lesser extent economics.

Kazakhstan

Key merger and acquisition deals in Kazakhstan over the last few years include the banking and finance sector:

Acquisition of Alfa-Bank Kazakhstan by Bank CenterCredit (2022)

Bank CenterCredit acquired 100% of the major Russian bank Alfa-Bank’s Kazakh subsidiary in a deal closed on 5 May 2022. Alfa-Bank had been subject to anti-Russian sanctions from March 2022 onwards due to the outbreak of war in Ukraine.

The rebranded bank, initially named Eco Center Bank, was fully merged with Bank CenterCredit by September 2022​. According to financial statements, the purchase cost CenterCredit $111mn.

Acquisition of Sberbank Kazakhstan by National Management Holding Baiterek (2022)

Following Western sanctions on Russian banks in April 2022, the Kazakh government facilitated the acquisition of Sberbank’s local operations in August 2022 to stabilise the national banking system​. Sberbank’s Kazakhstan subsidiary was previously the second largest bank in Kazakhstan, so this was a truly major acquisition. Sberbank had previously had to provide $2.51bn in loans to keep liquidity at suitable levels due to consumer fears over sanctions, with customers withdrawing 38% of funds.

The sale was made on 1 September, and, by 21 September, the asset was renamed Bereke Bank. The US lifted sanctions on Bereke bank in March 2023.

Lesha Bank acquires Bereke bank (2024)

As the swift next chapter to the above deal, on 8 October, Qatari Lesha bank acquired complete ownership of Bereke bank for $135mn. Lesha Bank, formerly known as Qatar First Bank, is a sharia-compliant investment bank. Its Islamic credentials hold some weight in a country that is majority Muslim.

A senior executive described the acquisition as being in line with the bank’s global expansion strategy, indicating interest from Gulf States in Central Asia. 

Freedom Finance Insurance’s acquisition of London Almaty Insurance (2022)

Freedom Finance Insurance, a subsidiary of the global company Freedom Holding purchased the insurance company London Almaty from Dostyk Leasing in August 2022, as part of the company’s focus on digital insurance solutions and car insurance products​ in Kazakhstan. The merger was completed by December 2022.

Freedom Holding is a NASDAQ-listed company with offices all over Central Asia, although it is headquartered in Almaty, Kazakhstan. In addition to insurance, Freedom Holding also offers various financial services, such as investment banking, analysis, stockbroking and asset management, along with standard consumer banking services via their bank Freedom Finance.

Uzbekistan

OTP & Ipoteka Bank (since 2022)

Mentioned briefly in our privatisation piece last month, OTP Bank completed the acquisition of a 73% stake in Ipoteka Bank, Uzbekistan’s fifth-largest bank, in June 2023. This transaction marked OTP Bank’s formal entry into the Uzbek banking sector, following an initial agreement and signing of contracts in December 2022. OTP Bank plans to acquire the remaining shares over the coming years, gradually increasing its ownership to 100%.​

Coca-Cola Bottlers Uzbekistan

Turkish firm Coca-Cola İçecek (CCI) acquired a 57.1% stake in Coca-Cola Bottlers Uzbekistan in 2023. Coca-Cola Bottlers Uzbekistan was established as a joint venture between Coca-Cola and the Uzbek government, but as part of its privatisation plans the Uzbekistani government sold its stake in Coca-Cola bottlers Uzbekistan for $252.3mn, a deal that was approved by the Uzbekistan State Commission for Tendering for the Sale of State Property. 

Uzbekistan has striven in recent years to liberalise its economy, with privatisation one of its main methods of achieving this, along with issuing Eurobonds. The country has tried to champion itself on the world stage as one that is open for investment. In reality, progress has lagged behind expectations until recently, with key areas of the economy such as mining, energy and manufacturing remaining mostly under state control.

This has changed somewhat more recently, with a new law on privatisation coming into effect in May, giving potential buyers significantly more information on potential opportunities and increasing the number of ways a company can be privatised rom auctions and public offerings to direct acquisitions. Still, in many cases the Uzbekistani state sells minority stakes in the SOEs and retains control over the businesses supposedly privatised.

Coca-Cola İçecek is a bottling company is majority owned by the Turkish company Efes Beverage Group, one of Europe’s largest beverage companies, while Coca Cola maintains a significant minority stake.

In 2024, Coca-Cola İçecek began the construction of two bottling plants in Uzbekistan, one in Samarkand and the other in Namangan, at a cost of $165m. The factories are expected to product 478mn litres of soft drinks annually.

While the plant’s products are expected to be mostly for domestic consumption, some output from Namangan located in the densely populated Fergana valley and close to Uzbekistan’s neighbours Kazakhstan, Kyrgyzstan and Tajikistan, will be exported.

Kaspi.kz and Humo Payment System (2024)

Kazakhstan's fintech leader, Kaspi.kz, recently announced plans to acquire Humo, a prominent Uzbek payment system. Kaspi is a payment system provider that provides e-commerce, cashless payment and financial services, and is noted for being one of Kazakhstan’s most innovative companies.

Kaspi has grown hugely, even on a global scale, including a successful initial public offering (IPO) on the NASDAQ this year – one of the largest in recent years. Kaspi.kz's current market capitalisation is roughly $24bn. It has come to dominate in Kazakhstan, with thorough penetration of the domestic market – making it only natural to expand into neighbouring Uzbekistan, especially given the country’s ongoing privatisation spree.

Humo is a popular payment system in Uzbekistan, supports both local and international transactions via its enormous network, which includes 27mn issued payment cards, 6,400 ATMs and over 210,000 payment terminals. In the first quarter of 2024, Humo's net profit increased by 88% to reach $2.9m.

Central Asian intra-regional cooperation by states and businesses alike is just as important as extra-regional cooperation, given the relatively small size of economies within the region and the large geographical and therefore logistical barriers that separate Central Asia from the wider world. Furthermore, it is natural that Kazakhstan, by far Central Asia’s largest, most sophisticated and developed economy with the second largest population, has begun wielding economic influence over its neighbours such as with acquisitions like this.

Kyrgyzstan

AltynGroup Holdings – Mining Sector Acquisition (2022-2023) mentioned above in the Kazakhstan section

Tajikistan

Orienbank and Tajik Sodirot Bank: There have been discussions and government-backed initiatives in recent years to consolidate Tajik banks, such as Orienbank and Tajik Sodirot Bank, in response to economic pressures and to strengthen the banking sector. While not a traditional M&A driven by private investors, this reflects the government's approach to mergers to stabilise the financial sector​.

Turkmenistan

Most of the examples are not traditional M&A in the private sector sense, as Turkmenistan’s strict state controls limit typical acquisition activities. Most business engagements in Turkmenistan happen as state partnerships or joint ventures due to heavy regulation and centralised control over sectors such as oil, gas, and chemicals.  

TAPI pipeline

The TAPI (Turkmenistan, Afghanistan, Pakistan and India) pipeline project in Turkmenistan is a joint venture between the four countries to ship Turkmenistani gas through Afghanistan and Pakistan to energy-hungry India​. The section of pipeline in Turkmenistan has already been completed. The pipeline will transfer 33bn cubic metres of Turkmenistani natural gas annually to Afghanistan, Pakistan and India.

At an estimated cost of $10bn, the TAPI pipeline will span 1,814km. Pakistan and Turkmenistan will provide the financing for project, due to the refusal of most countries to engage with the Taliban government of Afghanistan.

The pipeline has been planned for decades, but progress had stalled from when the Taliban took over Afghanistan in 2021 until it resumed in September 2024. With 816 km of the pipeline running through Afghanistan, TAPI will supply Afghanistan with enough gas to meet its energy needs, as well as generating around $450mn in annual transit fees.

Overall, while not electric in pace, there are deals taking place and in particular in finance and key service sectors. Often, this is where international spenders will find most edge. 2025 may not look like the year of the deal for the region, but unpredictable changes globally – not least since the US election – could see opportunities arise across Asia as a whole. We will keep a close eye on the scene.

Urus Advisory is a risk intelligence consultancy working across the entire region. urusadvisory.com

ClearPic.ai is a screening platform for investors in Eurasia