After Energy
Resources or Mongolian Mining Corporation (MMC) successfully traded its shares
at an international stock exchange, questions have resurfaced if ordinary
Mongolians can ever hold shares in companies that work here. D.Achit-Erdene, President
of the Mongolian International Capital Corporation (MICC), answers our
journalist’s questions on the issue.

What did Mongolians have to do to buy shares in
the IPO?

They had to submit a copy of their passport and citizen ID card to MICC, along
with details of their bid. We initially wanted a minimum of USD10,000 to open
an individual account but later reduced it to USD5,000. We help people to sell
and buy not only at the Hong Kong Exchange but at other exchanges in the world
also. The holder can monitor his account on the Internet and can also issue
instructions online.

How much of the shares were bought by
individuals and non-financial institutions?

An IPO at a large international exchange has to observe very detailed rules.
For example, 90% of the shares MMC offered were reserved for large investors or
funds, leaving only 10% for small investors. We were happy that 1% was kept for
Mongolian citizens. We were surprised by the strength of the demand. The 1% meant
USD7 million, which is quite a large figure, but we received enough orders to
stop booking after two days.  We then
submitted fresh applications to the secondary market.

What is the difference between buying at the
primary market and at the secondary market?

Prices are fixed at the primary market. This was HKD7.02 per share. This would
change in the secondary marker according to demand. The demand continued to be
so strong in Hong Kong that prices kept rising, and were 20% more after five
days. At close of trading on October 19 the rate was HKD9.60. This fell to
about HKD9 on October 20.

Anybody who wants to buy shares can do so
through MICC?
Certainly. They can come in person to open an account or apply through website http://www.micc.mn/. We trade in all shares at any exchange
of the world. So many Mongolians were interested in the MMC IPO because they  knew of the company and trusted its management,
not because the shares were sold at Hong Kong.

Is there a limit on the number of shares one
can buy?
Shares were sold in blocks of 500. Anybody opening an account with us with a
minimum of USD5,000 could ask to buy not only MMC shares, but those of any other
company listed at the exchange. These include Google and Citi Bank shares. 

Are there other Mongolian companies considering
an IPO at the international market?
Kharanga Iron LLC will have an IPO in Australia in December. Two other
companies are also making preparations and we have placed advance booking. We also
traded in Khunnu Coal stock when it had an IPO in Australia last February.
MMIC acts not only as a broker but also offers help in raising capital to
companies active in Mongolia. We publish the MICC Mining Index. Our
representatives meet with company officials and offer results of our studies.

Apart from MMIC, which other brokerage firms
dealt with MMC shares?
We had been allotted special rights at the primary market but there was an
Australian company and others in the secondary market.

Could organizations and companies buy shares?
Yes, they can, just like individuals, but there is more paper work involved.

How many Mongolian citizens bought MMC
shares?
I cannot give you the exact number as such records were not kept. My rough
guess would be about 100.  We would of
course like the number to be more.

What percentage of its shares did MMC sell at
the IPO?
It sold 719 million of its 3.6 billion shares, which is about 20%. The prospectus
document has all the details and can be seen at the website www.mmc.mn.