MICROCAPITAL BRIEF: IIV Disburses $18m to Khan Bank of Mongolia, Including for On-lending to MSMEs Developing Post-COVID Business Models

Germany’s Invest in Visions (IIV), under the advice of Belgium-based Incofin Investment Management, recently lent USD 18 million to Khan Bank of Mongolia from the fund IIV Mikrofinanzfonds. The proceeds primarily are slated for on-lending to micro-, small and medium-sized enterprises (MSMEs), especially those seeking to adjust to COVID-19, such as by transitioning to virtual business models. The bank also will use a portion of the funds to support its training and business consultation programs as well as for new initiatives, such as an online forum connecting consultants with entrepreneurs seeking marketing and financial advice.

Bavlai Erdenedelger, the Deputy CEO of Khan Bank, said, “Supporting our MSME clients during this unprecedented time is critical for COVID-19 recovery, creating jobs and boosting our economy. With this loan facility, Khan Bank is better positioned to address the long-term financing needs of our clients and to strengthen their resilience.”

Established in 1991, Khan Bank provides microfinance and traditional banking services to 2.5 million clients via online channels and 547 branches across Mongolia. It caters to MSMEs and retail clients, including in rural areas. Its service menu includes deposits, international transfers, escrow services, payment cards and various types of loans. As of March 2021, Khan Bank reported total assets of MNT 12.3 trillion (USD 4.3 billion), customer savings of MNT 7.58 trillion (USD 2.66 billion) and loans to customers totaling MNT 5.32 trillion (USD 1.87 billion).

Launched in 2006, IIV manages “investments in sustainable agriculture, social enterprises and social impact lending.” The firm created IIV Mikrofinanzfonds in 2011 to invest in micro-, small and medium-sized enterprises via intermediaries in developing countries. It does this mainly via “small and medium-sized MFIs [microfinance institutions], particularly in rural areas.” The minimum investment in the fund is EUR 100 (USD 109). During 2020, the sub-funds of IIV Mikrofinanzfonds generated gains of 0.92 percent and 1.32 percent. As of May 2021, the volume of the IIV Mikrofinanzfonds totaled EUR 781 million (USD 938 million), supporting 570,000 borrowers with an average loan size of USD 1,163. Of these borrowers, 52 percent are women, and 19 percent work in agriculture.

Founded in 2001, Incofin is a for-profit firm that seeks “to promote inclusive progress.” As of 2021, the company has 320 investees in 66 countries, mostly active in financial inclusion and agriculture. Incofin’s portfolio is valued at USD 1 billion and comprises the following funds: agRIF, BRS Microfinance Coop Fund, Fairtrade Access Fund (FAF), Fonds pour l’Inclusion Financière en République Démocratique Congo, Incofin CVSO, Invest in Visions, Rural Impulse Fund II, Volksvermogen and a loan portfolio of vdk bank. The firm also serves as an advisor to IIV.

By Sophie Fiala, Research Associate

Sources and Additional Resources

Incofin press release
https://incofin.com/incofin-supports-small-entrepreneurs-also-in-challenging-times/

Khan Bank homepage
https://www.khanbank.com/

IIV homepage
https://www.investinvisions.com/

Khan Bank financials, March 2021
https://www.khanbank.com/en/personal/page/quarterly-financial-report?menu=47

Previous MicroCapital brief about Incofin
https://www.microcapital.org/microcapital-brief-adas-ssnup-incofins-agtaf-supporting-mobile-app-from-sohan-lal-commodity-management-slcm-of-india-easing-farmers-buyers-assessment-of-seed/

Previous MicroCapital brief about IIV
https://www.microcapital.org/microcapital-brief-iiv-mikrofinanzfonds-loans-2m-to-finca-tajikistan-for-microfinance/

Did you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/.