Founded by prominent Mongolian businessmen, Mr Odjargal Jambaljamts and Mr Od Jambaljamts, in 1993, MCS Group is currently 74% owned by the founders, while the remaining shares belong to the Sponsor’s senior management. MCS Group first became IFC’s client in 2008. Since then, the Group has significantly strengthened its positions in the role as Mongolia’s (i) sole distributor of Procter & Gamble products; (ii) largest manufacturer and distributor of soft drinks and beer under licenses from Coca Cola and Asia Pacific Brewery; as well as (iii) the country’s 2nd-largest operator of a mobile communications network “Unitel” and became a strong player in many other businesses. The proposed repeat IFC investment in the MCS Group subsidiary MCSP is expected to help the Sponsor emerge as a leader in Mongolia’s property development sector.
MCS Property is a fully-owned subsidiary of the Sponsor specifically incorporated to consolidate the Group’s expertise in construction management, property development and property management. It has successfully participated in a number of residential, commercial and industrial developments, mainly related to other businesses of the MCS Group. Currently, the Company is in the process of scaling up its market presence, with the completion of a 1,642-unit affordable housing development “Shine Ger” to become MCS Group’s first hallmark project in the property development industry.

The proposed IFC investment is an MCS Group-guaranteed A loan of up to US$60 million to the Company to finance part of the cost of the Project, which is currently estimated at US$123 million. The remainder of the Project will be financed with proceeds from pre-sales of apartments and shareholder loans from the Sponsor.

60.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	60.0
Equity

* These investment figures are indicative

The office tower included in the Project will be built in the central areas of UB. The Shine Ger affordable housing development is being constructed on the outskirts of UB, approximately 50 kilometers from the central part of the city. In addition, the Project includes affordable housing in the vicinity of the UHG mine site, 500 kilometers to the south of UB. All the Project sites have adequate access to all the necessary infrastructure.

(i) The Company''s activities are focused on improving UB''s urban infrastructure. As such, they have a direct and immediate development impact with respect to improvements in living standards and inefficiency of doing business in Mongolia''s capital. In particular, the Company''s pipeline of properties scheduled for completion in the near future includes socially important developments, such as 1,617 affordable housing units in an innovative and replicable "Shine Ger" project with the goal to make home ownership affordable for young professional families;

(ii) MCSP is an important source of indirect employment with 4,782 indirect employees (e.g. contractors);

(iii) Through increased purchasing local materials and services, the expansion of MCSP activities will strengthen the Company''s linkages to the local economy;

(iv) MCSP is committed to bringing international property development standards and best practices to a country where the quality of construction needs to be drastically improved;

(v) The MCS Tower included in the Project will contribute to the development of the UB business infrastructure that lacks quality office buildings at this point in time.

(i) IFC will provide MCSP a corporate loan with a tenor, which is not available to the Company in Mongolia. The stable long-term financial base would not only allow MSCP to complete the properties in its pipeline but also to capture future opportunities in the rapidly changing UB property market throughout the life of the IFC loan, which is extremely important in the context of the Company''s goal to sustain and strengthen its position as Mongolia''s leading property developer;

(ii) Support to a player operating outside export industries, which are well supported both locally and internationally;

(iii) Risk mitigation through prudent financial structuring and

(iv) Support to an existing client with a proven financial and development track record in a difficult business environment.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific and reversible environmental and social impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
Key environmental, health and safety, human resources and social issues that were reviewed included MCS Property’s environmental and social management system, including its relationship to MCS Group level procedures and systems; labor and working conditions; contractor management, site selection and assessment; building design and efficiency. These issues were reviewed in relation to the three known projects for IFC financing but their adequacy for future, yet undetermined projects was also assessed. The Environmental and Social Review Summary provides full details.