Kazakhstani Prime Source to merge with an American IT company

The deal, which is quite big for the local market, might be closed soon, as a person familiar with the question reported to the Kursiv edition. FatBrain AI, an American publicly traded software company, has completed negotiations with Prime Source, one of the key players in the domestic IT market. The Kursiv edition has already found documents in open sources that confirm this information.

Prime Source ranks as one of the top five Kazakhstani software developers. Also, the company is the largest independent player in the industry, according to Kursiv Research. Software developed by Prime Source is used, for example, to counteract the laundering of illegal income and financing of terrorism. These are so-called AML solutions that are installed in nine of the ten largest banks in Kazakhstan as their executives reported. Prime Source products help in improving business processes through software robotics, integration of different data silos, and so on. The company’s portfolio spans more than 400 projects in finance, telecommunications, industry, and the public sector.

American side

According to the documents published by SEC, the American side is represented by LZG International, Inc. (OTC: LZGI), also known as FatBrain AI. The company acquired LZGI at the end of 2021 due to its plan to get new clients and achieve fast growth. FatBrain AI bought LZGI to increase the company’s capital and continue cooperation with clients such as IBM, Bank of America, Pilgrim’s Pride, Comcast and Samsung – something that LZGI had done before the deal. An announcement on the SEC website says that «FatBrain AI’s acquisition of IT assets includes software that uses artificial intelligence to help clients automate corporate decision-making cycles.» LZGI stock has been traded on the American OTC market since 2012. About half of the stocks on OTC in the U.S. are shares of small companies and startups that in theory may turn into big corporations.

It’s worth noting that FatBrain AI’s management team includes leaders with plenty of IT and corporate experience. For example, Peter B. Ritz, CEO of the company, worked in AirClic where he was in charge of the commercialization of the QR code on mobile devices (AirClic was acquired by Motorola and then by Descartes). As a member of Vmware’s cloud advisory board, he helped the company to introduce the SaaS licensing system. Also, he is a founder and former CEO of Observable Networks, a company that provided AI/ML-enabled Network Security-as-a-Service. This company was later acquired by Cisco. In addition, Ritz together with Chief Operation Officer Shawn Carey has co-founded and led a cloud software company, a supermassive datacenter and software developer for public/private cloud workload orchestration.

R&D in FatBrain is led by Dr. Rajarshi Das, a pioneer in AI, Autonomic Computing and Multi-agent systems research with over 25 patents and 60 peer-reviewed publications. Before FatBrain, Rajarshi led an AI and machine learning research group at IBM Watson Research Center. Over his 16-year career in the center, he closely worked with professors from Harvard, Cornell and leaders at Google DeepMind. «Rajarshi and his FatBrain AI team have designed and deployed automated decision-engines at many Fortune 500 companies. These systems can estimate risks at any level or time scale in dynamics.

Overall profile

The motto of FatBrain AI is “Artificial Intelligence for Everyone.» Given the information published on the company’s website and its press releases, the company is going to reach an extremely ambitious goal – to expand the niche of the service to over 200 million small and medium-sized businesses (SMEs) with AI-enabled cloud solutions to quantify and help in making decisions. Big business uses McKinsey, Bain, BCG and the big four – Ernst & Young, PwC, Deloitte and KPMG. As a rule, SMEs are satisfied with the tools provided by the consumer-focused FAANG platforms, if they use anything at all. But the SMEs (that’s 213 million enterprises worldwide), which generate half the world’s gross product and 70% of jobs, according to FatBrain AI, do not have decision-making solutions at their disposal. The amount of data available is growing, the shortage of time is also increasing, and the variability in decision-making is increasing.

It seems that FatBrain AI is trying to solve the problem and become something like an automated McKinsey for medium-sized businesses. In this endeavor, the company bets on artificial intelligence to quantify recommendations, although it is actively using a lot of open-source data and customer data. All of this ultimately helps, for example, to optimize the supply chain or the company’s finances or choose the best remuneration policy for personnel. The service can also be used to analyze risks in dynamics. In other words, judging by FatBrain AI’s website, the company is trying to create a kind of digital multitool for small- and medium-sized businesses.

In the early spring, LZGI acquired Intellagents, a tech company that provides solutions for optimizing insurance processes. Intellagents replaces expensive and cumbersome insurance operating models with a single, easy-to-use ecosystem. Transaction documents state that the platform allows insurers and brokers to quickly improve customer interactions and improve the efficiency of existing sales channels, insurers and brokers to enter new sales channels, use artificial intelligence to better assess risk and adjust pricing, rely on alternative data to make decisions while increasing the speed to market for products, and accelerate business processes. All of this aligns very well with FatBrain AI’s overall strategy and has strengthened the company’s position in the insurance sector.

Finally, in a recent report on the SEC website, LZGI announced that it has reached a deal with Evgeny Chsherbinin and Viktor Nazarov on the acquisition of Prime Source, a Kazakhstan corporation including its subsidiaries Prime Source Innovation, Prime Source – Analytical Systems, Digitalism and InFin-IT Solution. One of FatBrain AI’s core businesses is the automation aimed at fighting against money laundering; Prime Source does the same here in Kazakhstan. In general, the companies seem to have quite a bit of overlap. A release about the deal says that «Prime Source’s scale of IT engineering combined with FatBrain AI and an affordable subscription model will enable tens of millions of companies in the Middle East, Central Asia and South Asia to join the cloud and revolutionize the use of artificial intelligence.»

Prime Source CEO Evgeny Chsherbinin confirmed to Kursiv that the deal does take place. «Next week we are going to hold a press conference in Almaty on this subject where we will disclose details. In essence, an international corporation is being built that will create products for both Kazakhstan and the international market. All of the existing contracts are still in effect. Prime Source works as before, remaining legally a Kazakhstani company. At the same time, by joining forces with our American partners, we are entering global markets and new opportunities are opening up for everyone,» he stated.