43012 - Transcapital

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Summary of Investment Information

Project Number

43012

Company Name

TRANSCAPITAL NBFI, LLC

Date SPI Disclosed

Apr 10, 2020

Country

Mongolia

Region

East Asia and the Pacific

Projected Board Date

May 20, 2020

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Aug 29, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jun 25, 2020
Signed : Nov 9, 2020
Invested : Jan 4, 2022

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed investment is a local currency denominated syndicated senior loan facility to Transcapital NBFI LLC (the “Company” or “Transcapital”), the largest microfinance institution (“MFI”) in Mongolia, and includes (i) a 3-year IFC A loan of MNT equivalent of up to US$3 million; (ii) a 3-year hedged A loan participation (“HALP”, or US$ parallel loans plus a cross currency swap) of up to US$9 million equivalent. This if IFC’s first engagement with Transcapital. The proposed investment will help the Company to further improve the access to finance for the underserved micro enterprises in Mongolia, especially those in the rural and suburb areas of Mongolia outside of the capital city Ulaanbaatar; in addition to supporting the development of microfinance sector in Mongolia by helping microfinance institutions gain access to mid-term local currency funding and strengthen institutional capacity.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management	1.50
Guarantee
Loan	2.99
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

The expected development impact from this proposed project is to increase access to finance for underserved segments in Mongolia, namely micro-enterprises/individuals, especially towards women and in the rural and semi-urban areas in the country. Through the project, IFC will also be providing much needed mid-term local currency linked financing to Transcapital, through IFC's own account and also via the mobilization of international lenders, which will also help to diversify the Company's funding sources and support its envisioned growth.

IFC has clear financial additionality through this Project as it will provide mid-term local currency funding which is currently limited to non-banking financial institutions (NBFIs) in Mongolia. 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. For this Project, IFC will also be mobilizing funding from international investors which will help to provide much needed funding to one of the largest microfinance providers in Mongolia - to further its outreach towards the underserved across the country. The Project will also help to diversify the Company's funding sources. This will be IFC's first investment through a local currency linked instrument in Mongolia and the first engagement with a NBFI in the country.

E&S Category Rationale / Risks and Mitigation

The project involves an IFC syndicated local currency denominated senior loan facility to Transcapital, a Mongolian microfinance institution that provides small loans to individuals and micro enterprises in the country. It offers consumer loans, mortgage loans, business loans and energy efficiency equipment loans to borrowers who use such loans for consumption, trade, services, production/craft, housing improvement and other activities. The overall portfolio E&S risk of the company is low, and the project is therefore categorized as FI-3 in accordance with IFC’s Sustainability Policy. The company is required to develop and implement an environmental and social management system to ensure its lending activities will be consistent with the requirements of the IFC Exclusion List and applicable national E&S laws and regulations. It is also required to comply with IFC Performance Standard 2: Labor and Working Conditions for its own HR practices. The project doesn’t support any coal related activities such as coal mining, coal transportation or coal-fired power plants, or infrastructure services exclusively dedicated to support any of these activities.

Given the E&S risk nature of this project, development of a robust ESMS was not needed.

Contacts

For Inquiries About the Project, Contact

Transcapital NBFI LLC
Mr. Altanzul Zorigt
CEO
(976) 11332255
zul@transcapital.mn
Transcapital NBFI LLC, Transcapital Building, Partisan’s Street, Sukhbaatar District, 4th khoroo, Ulaanbaatar, 14250, Mongolia
www.transcapital.mn

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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