New York, NY, Point Roberts, WA - November 25, 2013
(Investorideas.com Mining stocks newswire) Investorideas.com staff:
Investorideas.com, an
investor
research portal specializing in sector research for independent
investors issues an exclusive interview with Mr, Harris Kupperman,
Chairman and CEO of publicly traded real estate company in Mongolia.
Mongolia Growth Group (TSX.V YAK; OTC: MNGGF).
Mongolia is currently one of the fastest growing economies in the
world, fuelled by a mining boom. Mr, Harris Kupperman shares insight
into both the opportunites and the obstacles and why investors should be
taking note of this new frontier.
Q: Investorideas.com
For investors that don't know
your company, can you give a brief history and summary of why you are positioned in Mongolia and what directed you there personally?
A: Mr, Harris Kupperman, Chairman and CEO
Over the past decade, Mongolia has been one of the world's fastest
growing economies with growth rates as high as 17% in 2011 and over 11%
in the first 9 months of this year. Over the next decade, I think that
the growth rate accelerates as the giant mines ramp up their production
of copper, gold and coal. This will create a massive wealth boom. As an
investor, I want to go where the growth is--hence Mongolia.
The problem was that before we built MGG, there was no way to get
exposure to that growth. There are a handful of mining companies, but I
don't know anything about geology. What I know is that these mines are
being built and the average Mongolian will see a huge increase in his
net worth because of the mines. That will translate into a boom in
consumer spending and I wanted to get leverage to that growth, so I
built MGG to put my own money into Mongolia. To date, I've invested over
$3 million in shares of MGG. With the help of other investors, many of
them close friends; we have raised capital and built a portfolio of
assets focused on the growth of the consumer.
Of course, given the dramatic GDP growth that we've already seen
since we started the company, we have sizable gains on our property
portfolio. However, this is just the beginning. If you look at the
evolution of cities, it is all about going to the capital city,
acquiring properties in the best locations and then letting the economic
growth work for you. There is over $2 trillion worth of resource wealth
that is in the ground, and that wealth will be mined over the next
century. This will be a very long- term bull market.
Q: Investorideas.com
What has your portfolio consisted of to date? - And you note in
your last newsletter that you are shifting company assets away from
smaller properties that are proportionately more expensive to maintain
and manage; towards larger institutional-quality assets that are easier
to scale. Can you expand on this strategy?
A: Mr, Harris Kupperman, Chairman and CEO
When we first arrived in Mongolia, the key was to
learn
how to do business there--to learn how the market worked--so we
purchased about 30 smaller properties. This gave us a great early
portfolio where the risk of making a mistake in portfolio selection was
negligible in terms of our company's future. We got to build a
management team around those assets and it is now the only institutional
property platform in Mongolia.
We are now selling those assets as we have learned the necessary
lessons. Our focus was always to own larger, institutional quality
assets that are tied to consumer spending and we are migrating into
those assets. In another year, our portfolio will consist primarily of
retail assets on the main streets in downtown Ulaanbaatar.
When Mongolians go out shopping or dining, we want them to be doing
it at our locations. Thus far, we are quite happy with the results. If
you look at our numbers, in October, our average rent increased by 21.4%
compared to the prior year. That is pretty much unheard of in a mature
real estate market like you find in the United States. Getting growth
plus income at the same time is the reason that I've gone to
invest in Mongolia.
Q: Investorideas.com
Can you give us first hand insight as to what kind of changes and expansion you are seeing in Mongolia?
A: Mr, Harris Kupperman, Chairman and CEO
In the past 3 years we have seen dramatic change in every aspect of
the economy. To start with, the GDP has almost doubled. Think about
that for a second--the GDP has doubled!
This has led to a consumer boom and a sizable middle class. We see
new businesses popping up everywhere to supply goods to these consumers.
Everyone is buying a new car or getting a bigger apartment. Everyone
wants the things that we take for granted here in the West--and for the
first time, Mongolians can afford those things.
In addition, we have seen the government really embrace this
growth. This summer, the government passed multiple laws targeted at
increasing foreign investment and making the business climate even
friendlier to foreigners. Over time, I think Mongolia will become a
favored place for foreign investment, much like Singapore or Dubai.
Q: Investorideas.com
In your recent newsletter you note that On October 28, the Ministry
of Mining for Mongolia signed an MOU with China's Shenhua Group Corp.
to supply 1 billion tons of coal over the next 20 years. What
environmental concerns does that raise to your as a real estate company?
And on that note do you think Mongolia can learn from the environmental
mistakes China made in its rapid industrial expansion?
A: Mr, Harris Kupperman, Chairman and CEO
In terms of our operations, I think that the environmental impact
will be negligible. These mines are hundreds of miles from Ulaanbaatar.
Mongolia is working to improve the environmental impact of mining. In
terms of making the mistakes that China has made, you have to remember
that Mongolia is a democracy. If they do not adequately monitor the
mines, the politicians will be voted out. This is a big difference when
compared to China--so politicians are taking the environment quite
seriously here.
Q: Investorideas.com
What do see as the biggest opportunity and challenge over the next five years as growth accelerates?
A: Mr, Harris Kupperman, Chairman and CEO
No country has ever grown as quickly as Mongolia currently is. The
biggest challenge is that things are simply growing too quickly. The
demand for things like electricity and transportation infrastructure are
outstripping the ability of the country to add capacity. That's what
happens when your economy grows at 1% a month. The government is working
to address these issues, but no country has ever grown as quickly as
Mongolia is--so there is no playbook to work off of. It's difficult to
plan for the needs of the country in 5 years. Unfortunately, if you
don't start planning for power plants today, they won't be ready in 5
years.
In terms of opportunities, when your economy doubles every three to
four years, everything is an opportunity. I think the real thing is to
figure out what Mongolia will need in five years, and then bring it to
Mongolia in two years. For us, that means upgrading our retail locations
and getting ready for the day that international brands show up and
need top quality locations. We want to be the first choice as landlord
for all of these brands and over the past year, we have been approached
by numerous international brands that are looking to set up a presence
in Mongolia.
Q: Investorideas.com
Currently you state you are the only publicly traded company
positioned in your space in Mongolia? Do see signs of that changing
anytime soon with new players coming to market?
A: Mr, Harris Kupperman, Chairman and CEO
I am actually quite surprised that no one else has shown up and
tried to copy us--especially given the success that we've had. I am sure
that they will come, but the longer that takes, the stronger our
first-mover advantage will become. Naturally, I welcome the competition
as it validates what we've created thus far.
MGG (YAK: Canada & MNGGF: USA) is a fully integrated and self-managed real estate
investment company,
and one of the largest owners and operators of high-quality commercial
properties in downtown Ulaanbaatar, Mongolia. The Company focuses on
acquiring, owning, managing, and redeveloping top-tier retail,
commercial, and office properties that are strategically located,
undervalued, and possess significant supply constraints. Learn more at
www.MongoliaGrowthGroup.com
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On November 13 th the Company announced it acquired Aqua Handling
of Texas LLC, an oilfield frac water transfer service company located in
the Eagle Ford Shale area of South, Texas that operates under the name
"AquaTex". The purchase price was $1.3 million consisting of $300,000 in
cash, $500,000 in notes and 1,443,696 shares of the Company's common
stock ($500,000 value based on the trailing 30-day average of the
Company's common stock prior to closing).
From the press release: 
Full news: