07.01.2016

Hertz licensee acquires contractor

The Hertz licensee in Mongolia - Mongolia Holdings - has acquired road contractor and rental company Monroad in what it describes as a “Contribution and Exchange Agreement”.

The deal will see Monroad shareholders holding 49 percent of the merged company, with the Monroad business becoming a wholly owned subsidiary of Mongolia Holdings, alongside Mogolia Equipment Rental Corporation.
Founded in 2001, Monroad is one of the largest road construction and earth moving companies in Mongolia, while its equipment division also rents out heavy equipment. Annual revenues are ariund 36 billion Tugriks ($19.2 million)

Brad Siniscalchi president of Mogolia Holdings and a former Hertz employee said: "This transaction marks a significant breakthrough for our 2016 business strategy. Monroad's existing facilities, capabilities and staff should significantly streamline and expedite the deployment of our Hertz Equipment Rental franchise operation in Ulaanbaatar, while potentially saving significant hard and soft launch costs. Mongolia Holdings will now possess a much wider array of capabilities necessary to meet growing demands for equipment and construction services, driven in part by international infrastructure development initiatives like 'One Belt, One Road' and mega-mining industry projects like Oyu Tolgoi."

Monroad chief executive Tengis Garamgaibaatar added: "Although it has not previously been our core focus, Monroad has operated an equipment rental business in Mongolia for many years. We plan to bring our facilities, equipment, highly-trained staff, equipment maintenance capabilities, logistics, market knowledge, reputation and enthusiasm to the deployment and build-out of Hertz Equipment Rental operations throughout Mongolia. The expanded platform makes us better prepared to tackle larger projects and to more aggressively execute the growth strategy of our existing road building and earth moving operations. We believe that the systems and efficiencies of Hertz and the talent and experience of the combined management team will create many advantages for Mongolia Holdings for years to come."

Mongolia chairman Michael Ussery, said: "In addition to all the obvious benefits of this transaction, the consolidation of Monroad into Mongolia Holdings facilitates the assimilation of 15 years of market knowledge, experience and relationships, which cannot be easily replicated by other market participants. In addition, with the recent $4.4 billion financing announcement of Rio Tinto's expansion of the Oyu Tolgoi mega-mine, it's not unreasonable to expect greater economic growth for this exciting market, which, in turn could measurably increase demand for Monroad's road construction and earth moving services."