Project Description
The provision of a senior secured long-term loan of up to US$ 18 million to Digital Concept LLC. The proceeds of the loan will be used to support the expansion of the South Korean GS25 format stores in Mongolia and the construction of a food factory.
Project Objectives
The loan will finance the company's investment programme aimed at the expansion of convenience stores, and the construction and equipping of a new food factory.
Transition Impact
ETI 65
The Project contributes to the Inclusive and Green transition qualities with a total ETI score of 65.
Inclusive: The Company will introduce a new, replicable and nationally accredited training programme in collaboration with at least one local vocational school, focusing on four skills/specialties that are key to the business.
Green: The Project contributes to the development of highly energy-efficient retail stores. In addition, the Company will establish a central distribution centre allowing lower inventory stock at stores and offer fresh products whilst reducing food waste and GHG emissions from transport.
Client Information
DIGITAL CONCEPT LLC
Established in 2020, Digital Concept LLC is a Mongolian convenience store chain operator of the South Korean brand GS25 convenience stores. The company is a joint venture between Shunkhlai Holding LLC, APU JSC and GS Retail Co. Ltd. of Korea.
EBRD Finance Summary
USD 18,000,000.00
Total Project Cost
USD 40,500,000.00
Additionality
The EBRD is offering a financial structure that is rarely available in the market. The Bank's additionality stems from the support delivered on setting higher economic inclusion standards in cooperation with local educational providers. The EBRD will also draw on its experience on energy and resource efficiency to support the Company efforts in setting higher building standards. An investment grant of up to EUR 242k under the Energy Efficiency Management Systems Programme ("EEMS Programme") will also be provided as part of the transaction to support the implementation of a comprehensive resource management system within the retail store network which will reduce food waste and GHG emissions from products delivery. The Client also makes use of the EBRD's expertise to deliver Gender-sensitive training and increase women's opportunities.
Environmental and Social Summary
Categorised B (ESP 2019) and Low Medium Risk. The Client (Digital Concept) is a Mongolian convenience store chain operator and is a new client of the Bank. Given the nature of the loan, environmental and social due diligence was conducted at a corporate level and covered all activities of the Company. ESDD was undertaken internally by ESD via a questionnaire. No significant, unidentified risks were revealed through the due diligence process. The review demonstrated that the Company's management of E&S issues is generally focused on national compliance and is not done within the context of structured management systems. The ESAP focuses largely on permitting and management systems and includes actions for the Company to further develop the H&S management system to include: i) an environmental & social management plan; ii) integrate E&S considerations into the supply chain; iii) contractor management; iv) develop traffic and road safety; v) identify actions on climate resilience and adaptation; vi) improve the HR related policy and vii) develop a corporate level stakeholder engagement plan. The ESAP is structured to ensure Company compliance with the Bank's Performance Requirements and has been agreed with the Client. The Company will be required to provide annual E&S reporting on the implementation of the ESAP.
Technical Cooperation and Grant Financing
The Project will benefit from the following Technical Cooperation assignments:
- Project Preparation Support Programme funded by the JECF to partially cover the legal due diligence costs of up to US$ 67,000; and
- Inclusive TC of up to € 60,000 under the Inclusion Technical Assistance Framework to partially support the setting up of the Training Academy programme of Digital Concept LLC.
Company Contact Information
Batbayar Narandelger
batbayar.n@digitalconcept.mn
+97691117968
www.digitalconcept.mn
Digital Concept LLC
Khan Bank Tower, 6F
Khan-Uul district
Ulaanbaatar
Mongolia
Implementation summary
PSD last updated
22 Dec 2022
Understanding Transition
Further information regarding the EBRD’s approach to measuring transition impact is available here.
Business opportunities
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Environmental and Social Policy (ESP)
The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.
More information on the EBRD’s practices in this regard is set out in the ESP.
Integrity and Compliance
The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.
OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.
Access to Information Policy (AIP)
The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.
Specific requests for information can be made using the EBRD Enquiries form.
Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.
Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.
