PRESENTATION

1. Matthieu Le Blan, EBRD Head of Office, Mongolia
Hong Kong, 17th November 2015
The Importance of Economic
Diversification and Import Replacement
Opportunities
EBRD's Role in Enabling Progress

2. Contents
1. EBRD in Mongolia so far
2. Why diversification is critical for Mongolia?
3. Opportunities& Examples
4. Supporting diversification through appropriatefinancing
2

3. 1. EBRD activity in Mongolia

4. • The EBRD arrived late in Mongolia…
• …but had a significant impact since 2006.
• 70 projects signed worth more than US$ 1 billion financing, mobilizing
almost US$ 2 billion co-investment in the form of debt, equity and
guarantee.
• Mongolia is a good exampleof successful transition in the making.
Snapshot

5. Transaction overview
2006 2007 2008 2009 2010 2011 2012 2013 2014
FI 4 8 9 - 4 6 28 17 22
M&S - - 6 3 7 5 7 33 83
Energy - 18 31 26 153 31 359 7 8
Agribusiness - 8 5 2 20 12 23 7 5
IT and Equity Fund - - - - 1 8 1 - -
Total ABI 4 34 51 31 185 62 419 64 117
No. of Transactions 1 6 11 8 13 12 16 12 15
4
34
51
31
185
62
419
64
117
-
2
4
6
8
10
12
14
16
18
20
-
100
200
300
400
500
No. Transaction
ABI/EUR million
ABI and Number of Transaction 2006-2014

6. Portfolio by sector (mln EUR)
PORTFOLIO COMPOSITION 2011 2012 2013 2014 Oct-15
%
total
∆15 / '14
# projects (excl. TFPs) 36 46 52 50 51 2%
Energy 13 16 15 14 14 27% 0%
FI 5 7 9 11 11 22% 0%
ICA 18 23 28 25 26 51% 4%
Infra 0 0 0 0 0 0% n/a
€ million 308 595 548 648 600 -7%
Energy 215 459 387 396 309 51% -22%
FI 23 47 58 76 91 15% 20%
ICA 70 89 103 176 200 33% 14%
Infra 0 0 0 0 0 0% n/a
Debt 238 512 447 558 512 85% -8%
Equity 70 83 97 88 78 13% -11%
Guarantee 0 0 3 2 9 2% 368%

7. Portfolio by sector (mln EUR)
Portfolio: Volume by Sector, EUR m
2014YE
Portfolio: No of Operations by Sector,
2014YE
FI
76
12%
Energy
395
61%
M&S
122
19%
IT & Equity
Fund
9
1%
Agri
45
7% FI
11
22%
Energy
14
28%
M&S
17
34%
IT &
Equity
Fund
3
6%
Agri
5
10%

8. 2. Why diversification?

9. Why diversification is critical for Mongolia?
SME development
Job creation
Regional development
Innovation
Balance of Payment
Mining sector needs a diversified economy: logistics is complex,
locally produced goods, acceptation by local communities
Better resilience to commodity prices (but non-mining growth was
negative in Q3 2015).
9

10. 3. Opportunities & Examples

11. Opportunities for diversification
The sectors where Mongolia has a competitive advantage:
• Import replacement: agro processing, construction materials (cement)
• Niche market agribusiness: cashmere, primary agriculture (meat, unique seeds)
• Tourism: dilemma between mass market and exclusive organic tourism
Challenges:
• Small population and low industrial base
• Logistics
• Access to finance for SMEs
Diversification is possible and will benefit from:
• Excess cash flow from mining (holdings)
• Value chain finance with mining: supply contracts, high standards
• Sovereign Wealth Fund to be used to develop Human Capital

12. Flour Mills of Nigeria Plc Rights Issue
Key Highlights Company Overview
• Senj Sant LLC, a subsidiary of a Monpolymet LLC,
a leading gold mining company in Mongolia.
• Developing a greenfield cement plant with a
1500t per day capacity in the Dornogobi
Province, Mongolia
• Located next to “SenjitKhudag” limestone
deposit, the biggest identified limestone reserve
in Mongolia.
• Total project cost USD 230M
• Promoting significant industrial Greenfield
investment in Mongolia
• First greenfield project in the cement sector
using environmentally friendly dry process
• The Project brings a technical cooperation with
an experienced international cement producer
Lafarge
Key TakeawaysTransaction Overview
• Senior loan of USD 65M
• USD 65M syndicatedon international markets to
add to EBRD’s own financing
• Equity stake of USD 20M
Flour Mills Plc
2012
N28,245,105,764
Rights Issue ofordinary shares
Lead Issuing House
Transaction: Senj Sant cement plant financing
EBRD role Lender + equity investor
Total
transaction
size
USD 85M
Instrument
Syndicated loan; equity stake in
project company
12
Sample projects: Senj Sant Cement Project

13. Flour Mills of Nigeria Plc Rights Issue
Key Highlights Company Overview
• APU JSC is the leading beverage producer in
Mongolia and one of the first privatised
companies in the country.
• Producer of beer, vodka, juice, Ultra High
Temperature sterilised milk in Tetrapak
packaging, mineral water and soft drinks.
• APU is expanding its business through acquiring a
new brewery, new integrated modern dairy factory
and new PET filling line.
• Total project cost USD 108M
• Development of a milk production supply chain
with local herders, promoting higher product
quality standards.
• Backing one of the largest fresh milk based dairy
production facilities in Mongolia as well as a
modern logistic centre.
Key TakeawaysTransaction Overview
• USD 56 million syndicatedloan
Flour Mills Plc
2012
N28,245,105,764
Rights Issue ofordinary shares
Lead Issuing House
Transaction: APU Credit facility
EBRD role Lender
Total
transaction
size
USD 56M
Instrument Syndicated senior loan
13
Sample projects: Agribusiness: APU

14. Flour Mills of Nigeria Plc Rights Issue
Key Highlights Company Overview
• Teso Group (Teso) is a privately owned Mongolian
conglomerate engaged in food production.
• Teso is installing a new ice-cream production line
which will provide opportunity to improve the
quality of ice-cream products
• In addition, Teso is developing and integrated
warehouse and distribution center
• Total project cost USD 8.4M
• The first MNT denominated corporate loan in
Mongolia
• Support for a local food producer’s mid-term
strategy to become the producer of global well-
known brands
Key TakeawaysTransaction Overview
• Senior loan denominated in MNT equivalent to
USD 5.5M under Direct Lending Facility
Flour Mills Plc
2012
N28,245,105,764
Rights Issue ofordinary shares
Lead Issuing House
Transaction: Ice cream factory financing
EBRD role Lender
Total
transaction
size
USD 5.5M in local currency
Instrument Senior securedloan
14
Sample projects: Agribusiness: TESO

15. 4. Supporting diversification through
appropriate financing products

16. Access to finance requires dedicated products
Debt financing
Co-financing with local commercial banks
Value chain finance
The value of equity: beyond money
Careful restructuring when needed
Local Currency Financing
Many contracts are in MNT.
Decreasing cost of Fund in MNT
Risk Sharing facility to decrease interest rate
SWAPs: MongolBank and Private Placements
Leasing initiative
Amendments to the Leasing Law are being made
Support to local banks to develop leasing products
Liaising with vendors
16

17. Flour Mills of Nigeria Plc Rights Issue
Key Highlights Company Overview
• Khan Bank is the 2nd
largest commercial bank in
Mongolia with total assets and market share of
23% and 25% respectively.
• VCF component was to design, improve and
implement successful VCF products, which would
benefit MSMEs access to finance and the
effectiveness of large corporations’
supply/distribution chain.
• Total project cost USD 25 M
• The first MNT denominated loan to a Mongolian
bank.
• The project raised awareness in the banking
sector of new financing products and
demonstrated their viability.
Key TakeawaysTransaction Overview
• USD 25 M senior loan to on-lendto MSMEs with
two mutually linkedcomponents in 3 Tranches:
• Tranche 1 MSME loan for USD 12 M
• Tranche 2 VCF loan for USD 5 M
• Tranche 3 MSME loan for USD 8 M in local
currency
Flour Mills Plc
2012
N28,245,105,764
Rights Issue ofordinary shares
Lead Issuing House
Transaction: Value chain finance & MSME
EBRD role Lender
Total transaction
size
USD 25M:
• USD 20 M Micro Small and Medium
Enterprises (MSME) loan, of which
USD 8 M in local currency
• USD 5M Value chain finance (VCF)
loan
Instrument Senior loan
17
Sample projects: Financial Institutions: Khan Bank

18. Supporting SMEs to face the challenges
Better companies
• Corporate Governance, Transparency,Reporting
• Skill transfers: the value of foreign investment
Improving the standards
• Small Business Support and Enterprise Growth Program
• Business Plans, Certifications
Policy Development to support diversification
• SME Survey and SME Law
• Foreign Investments in SMEs?
18

19. Thank you