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EBRD supports expansion of Mongolian petrol distribution company
Loan and equity stake will promote private sector role, boost competition in key industry
The EBRD is investing up to $47.5 million in the Magnai Trade petrol stations group in Mongolia in a transaction that will support the downstream petroleum sector in the country and boost competition in the industry.
Magnai Trade will use the EBRD funds to finance the construction of new depots and gas filling stations, including convenience stores and cafeterias.
The private group is a leading Mongolian importer and distributor of petroleum products and has developed a large fuel wholesale and retail network with a significant market share in the local Mongolian market.
The EBRD’s investment will be in the form of an equity stake of 25 percent and one share as well as a credit to the company. Further funds will be put aside for the participation in potential future capital increases so that the EBRD’s stake is not reduced.
The funding will support Magnai Trade’s drive to establish itself further as a successful domestically-grown company, able to plan its operations over the medium term and compete successfully in the domestic market.
The EBRD investment will also enable the company to introduce advanced management information systems, offer new services and products and improve its Environment and Health and Safety as well as corporate governance standards.
Such enhanced corporate governance will have an important demonstration effect for increased transparency generally in the Mongolian corporate sector.
EBRD First Vice President Varel Freeman, signing the project in Ulaanbaatar, said, “This is a very important investment for the EBRD and for Mongolia. The project will help a strong domestic company improve its standards and offer new products and services in Mongolia. We are particularly pleased to support its growth as an independent private operator in Mongolia.”
Mr Ganzorig, President of Magnai Trade, said: ‘We are very pleased to work with the EBRD in a long-term cooperation, and in particular to have EBRD as a long-term shareholder in our company’.
The EBRD started investing in Mongolia in October 2006 and up to the end of September this year had provided financing of $101.7 million across a broad spectrum of sectors including financial institutions, non-alcoholic beverages, retail mining and mining services.
This is the EBRD’s fourth investment in the natural resources sector of Mongolia.
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