ADCB and CBD join IFC’s USD 210 million financing for Khan Bank to support Mongolian MSMEs
IFC, the private sector arm of the World Bank Group, has committed US$210 million to Khan bank JSC (MSE: KHAN), Mongolia’s largest commercial bank, under an approved financing package of up to US$300 million. All proceeds will support micro, small and medium-sized enterprises (MSMEs), with a focus on women-owned businesses, young entrepreneurs, rural enterprises and agricultural businesses.
Deal Terms
The US$210 million comprises a US$130 million loan from IFC’s own account, US$70 million mobilized from Abu Dhabi Commercial Bank (ADCB) and the Commercial Bank of Dubai (CBD) through IFC’s B loan program, and US$10 million of expected exposure via IFC’s swap hedge solution. Up to US$54 million is dedicated to women entrepreneurs. The package also includes IFC’s first tugrug-linked loan to a Mongolian commercial bank, alongside cross-currency swap facilities.
Why It Matters
Gulf capital enters Mongolia. ADCB and CBD are making their first-ever lending commitments in Mongolia. IFC’s B loan structure lets commercial banks lend alongside a multilateral lender, giving them comfort to enter a new frontier market. Bringing Gulf lenders into the country widens the pool of international capital available to Mongolian borrowers beyond traditional DFIs.
Tackling the currency mismatch. IFC’s first tugrug-linked loan and cross-currency swaps allow Khan Bank to raise foreign funding while lending long-term in local currency. Small businesses and farmers earning in tugrug can borrow without taking on exchange rate risk, one of the main barriers to long-term MSME credit in Mongolia.
Khan Bank’s record month. The deal comes shortly after Khan Bank’s US$172 million syndicated facility led by FMO, which also featured a tugrug tranche. Together, the two transactions bring roughly US$382 million of fresh long-term funding into Mongolia’s largest bank, with a further US$90 million still available under the IFC package.
A broader funding wave. Including FinDev Canada’s US$50 million loan to Golomt Bank and BlueOrchard’s US$15 million to Bogd Bank, Mongolian banks have attracted close to US$450 million in international development and impact funding in recent weeks, with a strong focus on MSMEs, women entrepreneurs and local currency lending.
What to Watch
Key indicators will be whether Khan Bank draws the remaining US$90 million under the IFC package, the growth of its tugrug-denominated MSME and agricultural lending, and whether ADCB and CBD’s entry paves the way for other Gulf and commercial lenders to fund Mongolian banks.
