Vietnam’s Mekong Capital mulls partial exit from jewellery firm

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Photo from Phu Nhuan Jewelry JSC, a portfolio company of Mekong Capital.

Vietnam-dedicated private equity firm Mekong Capital’s Vietnam Azalea Fund is mulling a partial exit from Phu Nhuan Jewelry, a company it invested in 2008, through selling its holdings on the stock exchange this month.

The $64-million fund of the private equity firm said it will sell 3 million shares of the jewels company, coded PNJ on the Ho Chi Minh City Stock Exchange, to bring down its ownership from the current 6.57 per cent to 3.52 per cent, according to a regulatory filing.

Mekong Capital started to invest $12 million in Phu Nhuan Jewelry in 2008, then an unlisted company. Founded in 1988 as a state-owned firm, the ornament trader was privatised in 2004 before being listed in 2009.

PNJ price closed last Friday trading at VND75,000 apiece ($3.3), having been increasing around 2.5 times over the last 10 months.

The company posted a 116 per cent year-on-year jump in pre-tax profit within the first half of 2016, which reached VND304.5 billion, it said in an announcement.

Meanwhile, the Vietnam Azalea Fund has finished the divestment from Vietnam’s tech major FPT in May, and is looking for more exits as its 10-year life span will terminate in 2017.

The fund made a 1.8x return, in the US dollar, from selling the remaining FPT shares it was holding, marking the 17th full divestment. It was followed by the full exit from housing developer Nam Long Investment in June.

Earlier in March 2016, another portfolio company of the fund, pharmaceutical firm Traphaco, revealed that the PE investor will sell its entire ownership of 24.9 per cent sometime this year.

Based on the market price of Traphaco stock throughout the years since Mekong Capital’s maiden investment for a 5 per cent interest in 2007, it is estimated that the fund manager will profit 2.7 times on the total invested capital, excluding dividends.

Apart from Phu Nhuan Jewelry and Traphaco, Vietnam Azalea Fund is also still holding stakes at two unlisted firms, crop protection chemicals producer Loc Troi Group and real estate developer Intresco.

The Mekong Enterprise Fund II, another investment vehicle under Mekong Capital, has registered to sell 2.5 million shares of retailer Mobile World within a month ending July 28, following its second partial divestment from the firm in 2014. Mobile World stock has more than tripled in price since its debut two years ago.

Mobile World offered an 11x return for Mekong Capital as the PE investor made first partial exit in 2013.

The Vietnam-focused private equity firm has completed fundraising for its fourth fund, the $122 million Mekong Enterprise Fund III that is aimed at making some 12 investments within the first three years of operation. However, no investments have been announced since its launch in May 2015.

Meanwhile, the 2006-established Mekong Enterprise Fund is attempting to exit from its last remaining investment in Minh Hoang Garment.

Mekong Enterprise Fund II, a $50 million unit among the four funds that Mekong Capital is managing, is currently focused on empowering its existing portfolio companies. “The fund is on track to meeting its net internal rate of return objectives,” Mekong Capital said on its fund profile.

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Vietnam’s Mekong Capital hits final close of fourth fund at $112m, fails to meet $150m target

Vietnam: Retailer Mobile World eyes online, wider formats to stay on top of game

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