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.
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.
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.
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
Total Project Cost
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
Digital Concept LLC Khan Bank Tower, 6F Khan-Uul district Ulaanbaatar Mongolia
PSD last updated
22 Dec 2022
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