Frontier to launch $250m Mongolia fund

Frontier Investment & Development Partners plans to launch a $250 million Mongolia-focused fund early next year.

The Mongolia Investment & Development Fund expects a first close on $100 million in June 2009. The fund will invest in sectors such as mining and mining support industries, engineering, logistics and transport, according to Mandar Jayawant, who is driving Frontier’s effort in Mongolia.

The fund’s expected internal rate of return is between 30 percent and 40 percent and targeted investors include family offices, fund of funds and university endowments.

Frontier’s other “frontier market” fund, its Cambodia Investment & Development Fund, will hold a first close in January or February 2009 on $30 million to $50 million, on its way to a $250 million target. Its investors include private banks and high net worth individuals.

The Cambodia-focused fund will invest in the country’s agriculture, power, basic infrastructure and financial services sectors, said Marvin Yeo, co-founder and managing partner of Frontier.

Founded by Yeo, a former syndicate manager at the Asian Development Bank, and Kim Song Tan, a Singaporean economist, Frontier has offices in Singapore and Phnom Penh.

In April, Chinese private equity firm Hopu Investment Management and Singaporean sovereign wealth fund Temasek invested $300 million in a Mongolian ore mine. The investment into the mine’s operating company, Hong Kong Lung Ming Investment, takes the form of three-year convertible bonds, which will pay 10 percent interest.