Harnessing Growth: EEMEA’s Innovators in Action

Kaspi.kz JSC (Kaspi) (2.04% of Strategy assets) is the leading payments, marketplace and fintech platform in Kazakhstan. Kaspi’s business model is highly profitable and leverages a well-integrated ecosystem that supports growth across all three of its business segments. It also has plans to expand across Central Asia and the Caucasus in the near future starting with Ukraine.

• Payments—Kaspi facilitates technology-enabled cashless payments and enables merchants and consumers in Kazakhstan to transact digitally using a variety of products. In many cases the payments platform is used to onboard new customers and merchants on the platform, allowing Kaspi to offer them other goods and services through its “super app” strategy.
• Marketplace segment offers huge growth potential, as Kazakhstan's e-commerce market remains largely under-penetrated at approximately 9% (versus 25% in the U.S./32% in China), with Kaspi having a market share of approximately 45%.²
• Fintech—having its origins as a consumer finance bank before transitioning into a more integrated service provider through a super app, Kaspi continues to offer consumer lending products through its platform including “buy now pay later” products to leverage its solid consumer data and credit risk experience and capitalize on the strong growth opportunity in Kazakhstan’s underpenetrated consumer finance segment with consumer loans to GDP at 10.6%.³

Environmental and Social Impact through Digital and Fintech

(please see our white paper “The Disruption of Fintech Across Emerging Markets”).⁴

The company’s ESG opportunity is in its “E” and “S” impact—through its digital payments and fintech platforms, with Kaspi servicing under-served local consumers.

• Environmental

Payments and fintech business—transitioning to a cashless society which has a positive impact on “E.”

Digital and fintech platforms are environmentally friendly by design as digital payments and the rising penetration of online consumer lending products increase efficiency with cashless transactions replacing cash withdrawals in the economy. This year (Jan. – Jun. 2021), cashless payments reached 95% of total payments in Kazakhstan.⁶

Marketplace—Kaspi Postomat.

In an effort to reduce pollution and traffic congestion as e-commerce penetration rises, the company launched Kaspi Postomat, a network of delivery lockers which significantly reduces the number of delivery trips needed relative to door delivery. With delivery lockers also being at least 20% cheaper, they are considered more accessible/affordable, catering to a wider consumer segment. Kaspi plans to install 300 operational lockers in Almaty by year end 2021 and nationwide coverage is scheduled by year end 2022.

• Social

Meaningful social impact through payments, marketplace and fintech platforms.

Kaspi offers exposure to a digitally and financially under-served local population on both the merchant and consumer sides, whom it serves with an advanced technology-enabled offering of payments solutions, marketplace and financial services, thereby increasing access, efficiency, convenience and affordability.

Exhibit 4
Kaspi.kz Merchant & Micro Business Finance already at 7% of total in the third quarter 2021.

• Governance

Board of Directors Composition.

Kaspi’s Board of Directors is committed to the highest standards of corporate governance. The company’s Corporate Governance Code, which was adopted in 2018, is largely consistent with the principles of governance applicable to Kazakhstan companies whose shares are listed on KASE. The company has 50% (three out of six) independent directors and one female director, and the average tenure of the board is five years.

Alignment with international frameworks and standards. Proper ESG disclosure.

This is an area for improvement for this company. In the near future, we would expect to see its public commitment to alignment with widely accepted international frameworks and standards. And as a result, better disclosure of sustainability activity across the three business verticals should follow as well.

Transaction Capital Ltd. (1.18% of Strategy assets) is a niche financial company from South Africa, operating across three business lines:

• SA Taxi is a vertically integrated platform, using proprietary data and technology to provide developmental finance (i.e. micro lending), insurance and other services to empower small- and medium-sized minibus taxi operators.
• WeBuyCars is a trusted trader of used vehicles, offering finance, insurance and other financial products through its vertically integrated physical and e-commerce infrastructure.
• Transaction Capital Risk Servicers (TCRS) is a technology-led, data-driven provider of services and capital solutions relating to credit-oriented alternative assets spanning across South Africa, Australia and other select international markets.

Social Impact through Inclusion

Transaction Capital’s focus on under-served market segments where it can make a meaningful social impact is the most pronounced ESG opportunity for this company.

• Environmental

Promoting climate resilience

SA Taxi—New minibus taxis sold (supporting lower emissions): 4,064. Pre-owned minibus taxis sold with an increased focus on quality refurbished pre-owned vehicles (supporting circular economy): 2,186.
TCRS—Continued initiatives to reduce electricity and water consumption and manage waste in operations, which are considered to have a low overall impact already.

• Social

Supporting social inclusion
SA Taxi empowers small- and medium-sized enterprises (SMEs) through financial inclusion:

• Proportion of SA Taxi’s SME customers classified as previously under-banked or financially excluded: approximately 80%.
• Percentage of loans provided to black-owned SMEs: 100%.
• Total number of direct jobs created in financed fleet in 2020: 11,250.

Facilitating a safe and affordable alternative to lacking public transit.

Given the lack of mass transit infrastructure and the low affordability in South Africa, SA Taxi provides an affordable and safe alternative for people to move around and get to their jobs and homes who cannot afford either vehicle ownership or higher-end ride-hailing options like Uber.

• 73% of South Africans rely on public transportation and within that the share of minibus taxi has grown by 16% since 2013 to a share of 84% today with approximately 15 million commuter trips daily, proving to be an essential and non-discretionary public service.

Hiring inclusively and empowering employees.

• Number of employees: 3,965.
• Female employees: 59%.
• Total employee turnover rate: 34%.

• Governance

Alignment with international frameworks and standards. Proper ESG disclosure (public)

The company uses ESG World⁸ as a public platform to give the investment community easy access to its ESG database in the areas of ESG and other related sustainability agendas that are referenced in the United Nations Sustainable Development Goals (SDGs), Task Force on Climate-Related Financial Disclosures (TCFD), Global Reporting Initiatives (GRI) standards and the Sustainability Accounting Standards Board (SASB), amongst other sustainability frameworks and standards. This platform is updated on a regular basis to communicate the company’s latest disclosures.

Transaction Capital proactively engages with shareholders and other stakeholders to ensure long-term alignment of interest. One example of stakeholder and shareholder alignment is that in 2018, TC Group sold 25% of SA Taxi to The South African National Taxi Council (SANTACO) to allow industry participants to share in the revenue streams of the taxi industry across the value chain, while simultaneously ensuring sustainable alignment of industry participants with the company and its shareholders.