Private equity group helps Mongolian firms connect with outside world
Private equity pioneer supports companies through financing and managerial expertise
In a country rich in minerals Batsaihan Jamichoi provides a rare commodity - capital financing.
A partner in one of the country's first private equity groups, Mongolia Opportunities Partners, Jamichoi tries to help mid-tier firms with financial backing and managerial acumen.
"The main idea is financing into sectors with high growth potential. We help them find additional financing and strategic partners to help further business development. We also help improve corporate governance and general management practice so these companies would become one of the best performers in their sector. We function as a bridge," Jamichoi told the South China Morning Post.
The main idea is financing into sectors with high growth potential
A rambunctious parliamentary democracy and embracer of market economic reforms since the early 1990's, Mongolia's geographical remoteness seems an apt metaphor for its access to global capital markets.
Despite an abundance of natural resources, successive governments struggled during the 2000s to maintain healthy fiscal accounts in the face of volatile commodity prices, resulting in an intervention by the International Monetary Fund in 2009.
Only in recent years has the country been able to tap the global debt markets with a US$1.5 billion Chinggis bond and that issue took place before the deterioration in gross domestic product growth in late 2012. Sold in five and 10-year tranches, the government paid 4.125 per cent and 5.125 per cent interest respectively. A further US$580 million has been loaned via the government-backed Mongolian Development Bank.
In September, Mongolia's prime minister announced plans for a yen-denominated Samurai bond raising up to US$1 billion.
Data from Fitch and the World Bank suggests general government debt as a percentage of GDP will hit 40 per cent in 2013 from 29.3 per cent in 2011, while the fiscal deficit has deteriorated to 8.4 per cent of GDP in 2012 from 4.8 per cent in 2011.