International Finance Corporation (IFC) is considering a proposal to extend a local currency-denominated syndicated senior loan facility, equivalent to $12 million, to Mongolian microfinance firm Transcapital.
The financing will be IFC’s first investment through a local currency linked instrument in Mongolia and its first engagement with a non-banking finance institution in the country, IFC said in a disclosure.
The proposed investment will help Transcapital strengthen access to finance for the underserved individuals and micro-enterprises in Mongolia, especially women and those in the rural and suburb areas outside of the capital city Ulaanbaatar, the development finance institution said.
The project is also expected to support the development of the microfinance sector in Mongolia by helping microfinance institutions gain access to mid-term local currency funding and strengthening institutional capacity. IFC said it will also help Transcapital mobilise loans from international investors.
“Such funding is expected to be further curtailed given the impact of the ongoing COVID-19 crisis on global markets and on the Mongolian economy,” it added.
Transcapital is the largest microfinance institution in Mongolia, according to the World Bank Group unit.
The firm is majority-owned by the Namsraijav family in Mongolia. Zorigt Namsraijav, founder of Transcapital, and its CEO Altanzul Zorigt collectively hold 93 per cent of the company.
In addition to Transcapital, Zorigt Namsraijav is also the founder of Tuushin Group, which operates the first freight forwarder in Mongolia and the Tuushin Hotel.
IFC says in a paper on its investment in Mongolia that it is engaged with all key sectors of the local economy, from financial services and agribusiness to infrastructure and sustainable mining.
Since IFC first opened its office in Ulaanbaatar in 1997, it has invested and mobilised more than $470 million.
IFC’s other investment in the financial sector in Mongolia is Khan Bank, the country’s largest lender. It recently extended a $70-million bond and debt package to the lender.