Tenger Financial Group and XacBank Conclude Successful Exit From Mol Bulak Finance MCC, Kyrgyzstan

July 16, 2010. TenGer Financial Group and its subsidiary, XacBank, Mongolia’s leading commercial bank with microfinance focus, have successfully closed equity sale of their combined 30.5% stake in microcredit company Mol Bulak Finance, Kyrgyzstan.

The original investment in MCC Mol Bulak Finance was a milestone for TenGer Financial Group and XacBank (the “Group”) with long-standing vision and strategy of sharing achievements of XacBank with MFIs in Russia, China, South Caucasus and Eastern Europe.

As a pioneering strategic shareholder at Mol Bulak Finance, the Group has been able to deliver on its commitment to serve as a catalyst in the company’s institutional and business development since January 2009. The Group management is pleased with the hard work and dedication of the team at Mol Bulak Finance, and their success in realizing the potential that this partnership brought. Through active participation on Board and at senior management levels, TenGer assisted Mol Bulak Finance in instilling corporate governance standards, raising confidence of external microfinance investors and accessing diversified funding sources, while growing its market share, and enhancing the quality of MIS and risk management. Since the Group began to actively engage with Mol Bulak Finance in June 2008, gross loan portfolio grew more than six fold to USD11 million, while the number of active clients increased 6.5 times to 27.6 thousand at the end of 2009. In the process, net earnings more than tripled from USD80,000 in 2008 to USD290,000 in 2009, showing ROE of 20 percent. 

Since the inception of this partnership, the Group remained true to its core principles and values aimed at long-term, sustainable institutional development. One of the important preconditions for the Group to continue delivering sustained value added at Mol Bulak Finance was the acquisition of a majority ownership along the road. Since this could not be achieved in due time, both parties agreed to a divestment of the Group’s equity stake in the Company to a third party investor introduced by the management.

The Group CEO Ganhuyag Ch. Hutagt, who also served on the Board of Mol Bulak Finance over the past one year, emphasized: “It has been a very valuable experience for us to work with Mol Bulak Finance team on change management and capacity building, piloting the notion that a successful microfinance team from the South could replicate its model in another developing country. This pilot will serve as a springboard for the Group’s further expansion plans in the region. We have gained not only financially but also gained the trust from our major stakeholders and trust is something that is essential for any business, is hard to earn and easy to lose. Most importantly, now we have a better understanding of what needs to be done ourselves and firmly believe in the direction the Group has taken.”

The Group wishes every success to the new and existing shareholders of Mol Bulak Finance, its management team and employees in their quest to become one of the market leaders in Kyrgyzstan. 

Founded in 1999, TenGer is a family of companies, namely XacBank, XacLeasing, XacSecurity, Prime Insurance and Horus Nomadic Solutions, built to provide banking, leasing, security, insurance and technology related services. In 2009, TenGer launched its international expansion, a next phase of institutional development, with a pilot equity investment in Mol Bulak Finance Microcredit Company, and is preparing for investments in financial institutions in Central Asia, Russia and China to build an international group of companies primarily engaged in delivery of microfinance.

TenGer is owned by a group of local and international investors including EIT Capital Management LLC, IFC, EBRD, Mercy Corps, Triodos Bank Group, BlueOrchard Private Equity Fund and local NGOs.

XacBank is one of the largest banks in Mongolia providing inclusive and innovative financial products and services throughout the country with a network of 78 branches. Its clientele represents not only the lower-income segment of the market, but also a growing number of small and medium size enterprises.

Mol Bulak Finance is a young microcredit company operating in the Kyrgyz Republic since 2005. It provides small-unsecured group loans for individuals and groups, mainly women living in rural communities of Kyrgyzstan.

By author: admin - Jul 16, 2010 / Categories: News