Mongolia Growth Group Ltd. · TSXV:YAK.H
Mongolia Growth — Investor Presentation (March 2012)
42 slides from Mongolia Growth's investor presentation, March 2012
Slide 1: Leveraged to Mongolia's Growth
YAK:CN - Leveraged to Mongolia’s Growth March 2012
Slide 2: Legal Disclaimers
Legal Disclaimers This is not an offer to sell or a solicitation of an offer to purchase securities looking statements are typically identified by terminology such as “may,” by Mongolia Growth Group (the “Company”). Any such offer or “will,” “should,” “expect,” “anticipates,” “plans,” “intends,” “be
Slide 3: Legal Disclaimers
Legal Disclaimers Forward Looking Statements may carry on business; the speculative nature of oil and natural gas exploration, production and development, including the risks of obtaining This document, together with any documents incorporated by reference necessary licenses and permits; diminishing
Slide 4: Mission Statement
Mission Statement Leverage the tremendous growth in Mongolia Focused on acquiring, constructing and managing investment real estate in Mongolia while helping to build the country’s insurance industry 4
Slide 5: Why Mongolia?
Why Mongolia? Rich in mineral wealth Construction of world class mines Proximity to China Experiencing a high teen annual GDP growth rate Hard working and ambitious, pro-Western culture 5
Slide 6: The Country
The Country Land area: 1.56m sq.km Population: 2.7 million Political System: Democracy Ulaanbaatar Capital: Ulaanbaatar Located between Russia and China 19th largest country in the world GDP (2011): $8,14 Billion* GDP per capita: $2,872* GDP is likely to accelerate significantly in the future *NSO (
Slide 7: How Big is the Opportunity?
How Big is the Opportunity? Copper production forecast, thousand tonnes 1200 1000 800 Oyu tolgoi, Tsagaan suvarga, Bayan-Airag 600 Erdenet 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ACI Mongolia, The Financial Markets Association 7
Slide 8: How Big is the Opportunity?
How Big is the Opportunity? Mining production forecast, by minerals type, mln USD Nominal GDP estimation, mln USD 35,000 30000 30,000 25000 25,000 20000 20,000 15000 Oil Other sector 15,000 increase Iron ore Mining 10000 Coal 10,000 By capacity Copper 5000 GDP, mln usd 5,000 Gold - - - - - - - - - 0
Slide 9: Foreign Direct Investment
Foreign Direct Investment Foreign investments in Foreign Direct Investments, US$MN* Mongolia have increased in recent years Investments are primarily in 1,200 1,026 the resource sector 1,000 801 820 FDI per capita is $380US 800 709 643 600 500 485 367 337 400 317 184 195 200 - 2005 2006 2007 2008 20
Slide 10: Two Massive Projects
Two Massive Projects OyuTolgoiMine (OT)* TavanTolgoiMine (TT)* JV between Ivanhoe Mines and Rio Estimated to be the largest Tinto undeveloped coking coal mining Contains 81 billion pounds of copper district in the world, holding in and 46 million ounces of gold excess of 6 billion tones of coal Sche
Slide 11: A Simple Question
A Simple Question Question: There are tens of billions to be spent on capital projects that are in the planning and development stages, so how do you put this much capital into such a small economy? Answer: Get ready for the boom! 11
Slide 12: Mongolia Growth Group's Thesis
Mongolia Growth Group’s Thesis Mongolia has a small population with huge resource potential We anticipate large GDP and per capita income growth Historical comparables where an open economy has allowed for wealth creation are Kuwait, Qatar, and Kazakhstan We want to invest at the inflection point wh
Slide 13: Using Kazakhstan as an Investment Roadmap for Mongolia
Using Kazakhstan as an Investment Roadmap for Mongolia There Are Many Similarities Between Kazakhstan And Mongolia Both Resource Economies Both Former Soviet Satellites Culturally Similar Similar Soviet Architecture The Difference Is That Kazakhstan Is 10 years Ahead Of Mongolia In Its Boom 13
Slide 14: The Kazakhstan Boom from 2002 to 2008
The Kazakhstan Boom from 2002 to 2008 2002 2008 % Change Kazakhstan Oil Production 885,000 1,363,000 54% (Barrels/Day) *1 Kazakhstan GDP ($ USD $24,637 $104,853 326% Billions) *2 Kazakhstan GDP Per Capita $1,490 $6,626 345% ($USD) *3 Banking Sector Assets $556 $2,976 4,032% ($USD Millions) *4 *1: US
Slide 15: Asset Prices Responded Vigorously
Asset Prices Responded Vigorously 2002 2008 % Change Kazakh Tenge (Currency) 150.67*1 120.64*1 20% Kazakh Stock Exchange Index 104.55*1 2640.15*1 2425% Downtown Almaty (Largest $300-$500*2 $2,500-$4,000*2 833% City) Apartments Per Meter Downtown Almaty Land Per $200-$500*4 $25,000-$40,000*5 8000% Me
Slide 16: Current Prices in Ulaanbaatar on the Eve of the Boom
Current Prices in Ulaanbaatar on the Eve of the Boom Current Price in Current Price in Almaty Ulaanbaatar Downtown Apartments ($USD $3,000-$5,200*1 $600-$2,000*1 Per Meter) Prime Ground Floor Retail Space $20,000-$50,000*1 $1,500-$3,000*1 in Downtown ($USD Per Meter) Buildable Land In Downtown $25,0
Slide 17: Strategy
Strategy Focus on: Ignore: Industries likely to benefit from the Mining itself: growth in consumer income: Tough Industry Insurance Capital Intensive Asset Management Political Real Estate Boom & Bust Cycles 17
Slide 18: Real Estate
Real Estate GROWTH GROUP se mi Py. ls fa me aa
Slide 19: Mongolian Property Rights
Mongolian Property Rights Property rights are strongly protected by law Foreigners can own finished structures Foreigners can enter into land leases (max 100 years) Foreign and local corporations cannot own land 19
Slide 20: Ulaanbaatar City Map
Ulaanbaatar City Map Mountains City Is Constricted To Peace Avenue Is Only Downtown The North And South Main East-West Road By Mountains Mountains Airport Ulaanbaatar is constricted by mountains to the north and the south A single 2-lane east-west road constricts movement and focuses all development
Slide 21: View of Downtown UB
View of Downtown UB Gandan New UN Ger District Building North Parliament Central Business District Seoul Street 21
Slide 22: Residential
Residential Undersupply of modern housing in the city center Increasingly affluent Mongolians demand higher standards Expats have high expectations and sizable housing allowances Huge demand for low-income housing as Mongolians move from ger districts to permanent structures 22
Slide 23: Residential Plan
Residential Plan Focus on the city center Purchase select new construction Acquire undervalued older structures and redevelop them into modern housing units 23
Slide 24: Retail Space
Retail Space Purchase properties on high streets Focus on the best locations in the heart of the city Increased affluence should translate into high end retail shopping 24
Slide 25: Office Market
Office Market Undersupply of Class A and B Shortage of large floor plan space Very few entire buildings available for single company rental Rents are increasing rapidly 25
Slide 26: Our Portfolio
Our Portfolio 55 Residential units 7,900 meters² of Retail space 4,300 meters² of Office space 5,400 meters² of Redevelopment Opportunities 26
Slide 27: MGG Acquisition Growth Chart
MGG Acquisition Growth Chart 35,000,000,000 30,000,000,000 25,000,000,000 Redevelopment Office Space 20,000,000,000 Retail Space Residential 15,000,000,000 10,000,000,000 5,000,000,000 0 Feb '11 Mar '11 Apr '11 May '11 Jun '11 Jul '11 Aug Sept Oct '11 Nov Dec '11 Jan '12 Feb '12 '11 '11 '11 All data
Slide 28: MGG Real Estate Breakdown
MGG Real Estate Breakdown 20.0% 46.7% 12.5% Retail Redevelopment Residential Office 20.8% All data as of February 29th 2012. Percentages are calculated based on property values. 28
Slide 29: MGG Property Usage Breakdown
MGG Property Usage Breakdown 20.9% 66.7% 2.0% 4.3% Rented Corporate Use 1.7% Renovation Vacant 4.4% To be Sold Redevelopment All data as of February 29th 2012. Percentages are calculated based on property values. For the purpose of this chart, MGG’s insurance subsidiary, Mandal Daatgal, is considere
Slide 30: Monthly Rental Revenue
Monthly Rental Revenue 200,000,000 180,000,000 160,000,000 140,000,000 120,000,000 Redevelopment Office 100,000,000 Retail Residential 80,000,000 60,000,000 40,000,000 20,000,000 0 May '11 June '11 July '11 Aug'11 Sept '11 Oct '11 Nov '11 Dec '11 Jan '12 Feb '12 All data as of February 29th 2012 is
Slide 31: Insurance
GROWTH GROUP
Slide 32: Insurance in Mongolia
Insurance in Mongolia Total Premium (Million US $) Current market is underserved 30 Premium to GDP ratio is only 25 0.3%, versus 6-8% in some 20 developed markets 15 Some Mongolian insurers 10 make it difficult to collect on 5 claims 0 2006 2007 2008 2009 2010 2011 Q3 We want to build a reliable ins
Slide 33: Current Insurance Company
Current Insurance Company Mandal General Daatgal LLC Received insurance license on June 20, 2011 Operates in various property and casualty lines of business Initial capital of US$5m, making it the best capitalized insurer in Mongolia Researching the life insurance market in Mongolia 33
Slide 34: Insurance Management Team
Insurance Management Team Respected Mongolian managers, who built their previous insurance company into a premier insurer in the country Premium growth at 36% CAGR for 4 Years Combined Ratio of 70% from 2007 -2010 Average ROE of 40% from 2007-2010 Portfolio returns of 15% per annum from 2008-2010 34
Slide 35: Future MGG Plans
Future MGG Plans Evaluating multiple opportunities in financial services Researching various industries to enter Potential partnerships like our insurance venture Looking at unlocking value in publicly traded Mongolian Stock Exchange companies 35
Slide 36: Risks
Risks Political Risks Geopolitical Risks Commodity Economy China Slowdown Inflation 36
Slide 37: Management Team
Management Team Harris Kupperman Chairman & CEO 10 years as President of Praetorian Capital, a macro themed, small- cap focused, hedge fund Jordan Calonego, CFA COO and Board Member 14 years of experience in real estate development and investing 13 years of experience investing in operating business
Slide 38: Board of Directors
Board of Directors Paulo Bilezikjian Paul Sweeney Chairman of Andean American Gold Board Member of Polaris (AAG:TSXV) Minerals (PLS:TSX) Board Member of Alterra Power Bill Fleckenstein Corp (AXY: TSX) President of Fleckenstein Capital Board Member of Tahoe Resources (THO:TSX) Byambaa Losolsuren UMC
Slide 39: Management Philosophy
Management Philosophy Our structure is corporate, but we operate on the principles of a long-term partnership No founding management salaries or options The Board has been chosen based on relevant experience, intellect and a deep understanding and coherence to our guiding principles Our only upside
Slide 40: Mongolia Growth Group Ltd.
Mongolia Growth Group Ltd. Founded in February 2011 Listed on the CNSX - Ticker: YAK 34,143,352 shares outstanding 33.5% Sr. Management and Board ownership Approximately $51.5M Raised 40
Slide 41: Conclusion
Conclusion Mongolia is expected to be one of the fastest growing economies in the world over the next decade. We want to leverage that growth. 41
Slide 42: Contact
Contact For more information please visit: MongoliaGrowthGroup.com or contact: info@mongoliagrowthgroup.com 42
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