Mongolian bank, miner, hotelier seek HK funds

By Tom Miles

HONG KONG, Dec 21 (Reuters) - Mongolian companies including a bank and a mining firm met 16 investment banks during a tour of Hong Kong this week to discuss ways of raising finance, the participants said in an interview.

Executives from Mongolia's fifth biggest commercial bank, Zoos Bank, miner Altai Gold LLC and hotels-to-cashmere group Altai Holding LLC said they needed funds to expand and keep pace with the development of the poor but mineral-rich country, locked between Russia and China.

"Our bank wants to change its business focus to become an investment bank. And one purpose of this trip is study how to change our business focus," said Sharav Chudanjii, president and chief executive of Zoos Bank. "We're also interested in issuing bonds and shares in the Hong Kong market."

Like Mongolia's economy, Zoos is growing fast but still tiny. Its share price has quadrupled since it listed on Ulan Bator's stock exchange early last year but it is still has net equity of only $20 million. Its net assets total around $200 million.

"Now the European Bank for Reconstruction and Development [EBRD.UL] and the International Financial Corporation are interested in our bank. They want to buy some shares, up to 20-25 percent. We're also looking for a strategic partner."

Zoos wants to fund projects in the mining and agriculture sectors, the mainstays of Mongolia's economy, as well as construction and energy, which are expected to boom if the North Asian country harnesses the potential of its natural resources, which include coal, uranium, metals and even oil and gas.

"There are big projects in Mongolia but Mongolian banks can't finance them because their equity capital is not high enough," Chudanjii said.

The Mongolian group met banks including Citigroup (C.N), Goldman Sachs (GS.N) and Nomura (8604.T) as well as officials from the Hong Kong stock exchange, which wants companies from across Asia to list.

"We are looking beyond mainland China. We would like to attract companies in the region, particularly those with assets or operations in mainland China," Lorraine Chan, spokeswoman for Hong Kong Exchanges and Clearing Ltd (0388.HK), said.

She declined to name specific firms that were interested in listing in Hong Kong and said it was premature to predict when the first public offering of Mongolian shares might be.

"At this point in time we are just starting out," she said.

A GLIMMER OF GOLD

Altai Gold's co-owner and director, Battuvshin, who like many Mongolians only has one name, said his company was looking for funding to exploit the 20 licences held by the company, including one with 200 million tonnes of coking coal.

"We have one project ready to mine that requires $50 million. And to do more exploration work in the next two years we need to raise funding of $15-20 million," said Battuvshin.

"We have various exploration projects: uranium, hard coal, polymetals, gold. But the mining project which is ready to mine is a brown coal project very near to Ulan Bator. If there is any plan to build a power plant, the project will be very useful."