FIF – CA YiB – Transcapital Youth in Business loan II

Project Description

The provision of second senior unsecured loan of up to US$ 1.5 million (in MNT equivalent) to be provided under the FIF Youth in Business Programme in Central Asia (YiB CA) in favour of Transcapital NBFI LLC (TCMN or the Company).

Project Objectives

The proceeds of the Bank’s loan will be used for on-lending to eligible micro, small and medium-sized enterprises led by young people under the age of 35 (Youth MSMEs) in line with the eligibility criteria set forth in the YiB CA Policy Statement. In addition, TCMN will track all beneficiaries under the YiB CA by gender and has committed to ensuring that at least 30 per cent of all sub-borrowers will be women. 

Transition Impact

ETI score: 71

The project will be the second sub-operation under the YiB CA in Mongolia and will support Inclusive and Competitive qualities of the programme. The project is expected to increase lending to young people in Mongolia, facilitate TCMN’s capacity building and promote the transfer of skills to young business owners/managers in the country.

Client Information

TRANSCAPITAL NBFI LLC

Established in 2001, Transcapital NBFI LLC (or TCMN) is the 3rd largest non-bank financial institutions (NBFI) in Mongolia and has been a client of the EBRD since 2013. The Company is headquartered in Ulaanbaatar (“UB”), has a network of 38 branches, of which 19 are in rural areas, and employs circa 204 people. 

EBRD Finance Summary

USD 1,500,000.00

The EBRD finance US$ 1.5 mln.

Total Project Cost

USD 1,500,000.00

Additionality

Innovative financing structures and/or instruments: The project will benefit from a First Loss Risk Cover (FLRC) and a Performance Based Compensation (PBC), which is a tailor-made and innovative instrument in the Central Asian market.

Financing structure: the EBRD provides local currency financing on terms, which are not readily available in the market.

Standard setting: through a combination of elements (financing; FLRC; PBC; TC), the YiB CA will help TCMN raise its inclusive financing standards by generating a better awareness and understanding of the needs of the underserved segment of young entrepreneurs. Ongoing support and collaboration with the YiB TC consultant, vital for introducing innovative products, will enable the PFI to further refine and advance its offerings and delivery mechanisms, ensuring they better meet the needs of young entrepreneurs.

Gender SMART: The persistent gender gaps in youth entrepreneurship in Mongolia will be addressed through dedicated TC to TCMN that will help develop a gender-responsive approach to youth focused lending, thereby ensuring that youth outreach is designed for both young women and men.

Knowledge, innovation, and capacity building: The programme includes extensive capacity building, comprising training, advisory support for PFIs and for Youth MSMEs through activities of the Advice for Small Business (ASB) team, allowing all parties to access and benefit from knowledge and expertise that may not be present in the local market.

Environmental and Social Summary

Category FI (2019 ESP). TCMN is an existing client of the EBRD and recently received an onsite visit from the Environmental and Social Department to review their project appraisal processes, typical lending portfolio, and monitoring methods. TCMN has implemented environmental and social risk management practices in line with Performance Requirement 9 (PR 9) and follows labour and occupational health and safety practices for its staff and operations in accordance with Performance Requirements 2 (PR 2) and 4 (PR 4). TCMN has consistently met its reporting requirements throughout its relationship with the EBRD and has maintained the necessary processes and procedures. For the proposed transaction, TCMN will continue applying the relevant Performance Requirements (PRs 2, 4 and 9), continue maintaining an environmental and social management system to assess, manage, and monitor risks and impacts related to the sub-projects it finances, and continue its annual reporting to the EBRD.

Technical Cooperation and Grant Financing

A.  Technical Cooperation (TC)

The FIF CA YiB TC Programme includes two linked TC components:

(i)  tailored capacity-building for Participating Financial Institutions (“PFIs”).

Funding source: SSF

Amount/currency: EUR 4 mln at the FIF CA YiB level.

 

(ii) capacity-building for Youth MSMEs via the Advice for Small Businesses (“ASB”).

Funding source: SSF

Amount/currency: EUR 6 mln at the FIF CA YiB level.

 

B.  Co-investment grants / Concessional Finance (“Non-TC”) includes: 

• First Loss Risk Cover (“FLRC”), in favour of the client, of up to 5% of the proposed YiB Loan. The FLRC will compensate for credit losses of TCMN, if any, as a result of its participation in the FIF CA YiB.
• Result-Based Compensation (“RBC”) of up to 3% of the proposed YiB Loan. The RBC is expected to partially compensate TCMN for the up-front investments related to building the necessary infrastructure for a sustainable YiB lending expansion.

Funding source: SSF

Amount/currency: up to EUR 116,000 in total (or up to 8% of the proposed loan amount).

 

Non-TC: A first-loss guarantee of 12.5 per cent is provided by the SME Local Currency Special Fund to fund a first loss for the benefit of the EBRD.

Company Contact Information

Mr B. Mart
[email protected]
+976 18001600
www.transcapital.mn
Transcapital Building,
Partisan’s Street,
Sukhbaatar District, 4th khoroo,
Ulaanbaatar 14250, Mongolia

Implementation summary

PSD last updated

04 Feb 2025

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

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General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

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 [email protected]. 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 [email protected] to get guidance and more information on IPAM and how to submit a request.