Khan Bank Secures AIIB's First Private-Sector Investment in Mongolia: USD 130 Million

Khan Bank JSC (MSE: KHAN) has secured a US$130 million, five-year syndicated financing facility led by the Asian Infrastructure Investment Bank (AIIB), with participation from Korea Development Bank (KDB) and two Asian regional banks. The financing will expand access to long-term green funding in Mongolia, supporting projects in renewable energy, energy efficiency, green buildings, pollution control, water management and green transport. The transaction marks AIIB’s first private-sector investment in Mongolia and its first financing to a Mongolian financial institution.

Deal Terms

The USD130 million facility comprises USD80 million from AIIB, which led the financing, US$20 million from KDB, and a combined USD30 million from two Asian regional banks. The five-year facility combines Mongolian tugrug (MNT) and US dollar (USD) tranches, with USD50 million equivalent denominated in tugrug.

Khan Bank will use the proceeds to finance eligible green projects and activities, including renewable energy generation, energy-efficiency improvements, green buildings, pollution prevention and reduction, water management, wastewater treatment and green transportation. The transaction also establishes new financing relationships between Khan Bank and AIIB and KDB.

Why It Matters

AIIB enters Mongolia’s private sector. The transaction marks AIIB’s first private-sector investment in Mongolia and its first financing to a domestic financial institution. It introduces a new multilateral development lender to Mongolia’s banking sector and creates a potential channel for mobilizing international capital into the country’s green economy.

Local-currency financing. USD50 million equivalent of the facility is denominated in MNT, allowing Khan Bank to access long-term funding in the local currency. This is particularly relevant for green projects whose borrowers generate revenue in tugrug, as local-currency lending can reduce their exposure to foreign-exchange fluctuations.

Expanding green finance. The facility covers a broad range of eligible investments, from renewable energy and energy efficiency to water management and low-emission transport. By providing longer-term funding to a domestic bank, the transaction can help expand financing options for businesses and projects supporting Mongolia’s environmental and climate objectives.

Diversifying international funding sources. The syndicated structure brings together AIIB, KDB and two Asian regional banks. Beyond the funding itself, the transaction broadens Khan Bank’s institutional relationships and demonstrates how development finance institutions can work alongside regional lenders to channel capital into Mongolia.

Supporting Mongolia’s climate commitments. The financing aligns with AIIB’s priorities in green infrastructure and private-capital mobilization, while supporting Mongolia’s commitments under the Paris Agreement and its long-term development and green-development policies. Khan Bank’s nationwide branch network and established sustainable-finance activities provide a platform for distributing funding across the country.

What to Watch

Key indicators will include the pace of disbursement into eligible green projects, the allocation and uptake of MNT-denominated financing, and the environmental outcomes generated by the funded activities. The transaction also provides a reference point for future development-finance facilities to Mongolian banks, particularly those combining long-term funding with local-currency lending.

For Mongolia’s capital market, the broader question is whether this transaction encourages additional international development lenders to invest in the private sector and mobilizes further capital for climate-related infrastructure and business investment.