Orix invests $24m in Mongolian financial services group

In a statement Orix said it will apply for the necessary permits with a view to making the investment in June.

The valuation is based on estimates from investment bank Eurasia Capital, which values TFG at around $150 million.

Set up in 2001, TFG offers banking, leasing, insurance and investment banking services, principally in Mongolia. Xac Bank, its main subsidiary, is Mongolia's fourth largest commercial bank by assets and mainly serves small and medium-sized mining and construction-related businesses. It is looking to offer new services as card loans and internet banking.

Orix will act as a strategic partner, assisting TPG on business development and using the company's platform to pursue new investments and expand its assets within Mongolia.

Earlier this year, Orix committed capital to Mongolia Opportunities Partners' (MOP) maiden fund Mongolia Opportunities Fund I - reputedly the country's first ever private equity vehicle.

Mongolia's mining and agriculture industry is forecasted to grow at an annual average rate of 20% over the next five years. The government has set out policies to utilize private capital, including funds from foreign investors, to help it access its mineral wealth.

Investments in sectors such as financial services are seen as a way to leverage mining growth without being directly exposed to commodities risk.

Earlier this year, Mandar Jayawant, managing director and founder of MOP, told AVCJ that the sector was ripe for consolidation. "With around 15 banks for a population of around three million, the country is vastly over banked," he said. "There are four major banks right now, offering similar services which mostly involve retail banking."

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• Topics
• Central Asia
• Financials
• Expansion
• Mongolia
• Financial Services
• Growth capital