Mongolia fund to make first investment by October

The Mongolia Opportunities Fund wants to raise $75 million by June 2012 and has already received $25 million from investors including Mitsubishi Corp., International Finance Corp. and the European Bank for Reconstruction and Development. It is considering potential investments in 30-40 companies and, of these, four are strong candidates to becoming the fund's debut deal. The firms in question operate in the mining infrastructure, financial services and construction material industries.

Batsaihan is targeting companies that offer ancillary services to the mining sector because they require alternative funding channels to banks, which charge 20-30% in interest on loans. The fund wants to invest in 5-8 companies in total - holding stakes for 3-5 years - and deliver an IRR of about 30%

Mongolia has abundant natural resources and the IMF expects economic growth to reach 23% in 2013 as several large mining projects come online. Buoyed by surging coal and copper exports, the domestic benchmark MSE Top 20 Index has jumped 17-fold in the last five years, while the turgik has gained 4.8% on the US dollar over the last 12 months.

In April, Silk Road Management, a Mongolia- and Central Asia-focused investment firm, raised $30 million for its debut fund, known as the Mongolia Human Capital Fund. Most of the capital came from family offices and high net worth individuals in Asia, the Middle East, Kazakhstan and Russia. It is targeting financial services, media, IT, healthcare, education and professional services businesses.

Last year, Origo Partners opened an office in Ulan Bator to support a dedicated fund, Origo Altai Partners, for investment in Mongolia.

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