Vietnam-focused private equity firm Mekong Capital expects its $112.5-million Mekong Enterprise Fund III (MEF III) to be fully deployed in the first half of 2019, when it also plans to raise a new vehicle, a top executive with Mekong Capital told DEALSTREETASIA in a recent interaction.
MEF III, which was launched in May 2016 and announced its first investment two months later, has invested around two-thirds of its capital, said Chris Freund, Founder and Partner at Mekong Capital.
Freund expects the size of the next vehicle, Mekong Enterprise Fund IV, to be larger than MEF III.
“The deals in Vietnam are small. We need to be realistic that there is a limit to how much we can invest in most of the companies in Vietnam,” Freund said, without revealing the exact corpus targeted for MEF IV.
MEF IV will continue to focus on Vietnamese consumer-driven businesses such as retail, restaurants, consumer services, logistics, health services and education.
While other investors have made successful investments in technology, Freund said, the firm specialises in one sector to add the best value to the portfolio. “Tech is very different. It requires different skills that we don’t have,” he said.
MEF III has so far invested in six companies. Meanwhile, its predecessor Mekong Enterprise Fund II (MEF II) successfully divested MobileWorld making a cumulative returns multiple of 57x last year. MEF II was the top performing fund in Vietnam at the end of September 2017 rated by Preqin, Freund told this portal.
In addition to MobileWorld, the vehicle had also scored successful big exits from other education and consumer businesses such as Vietnam Australia International School, Golden Gate and International Consumer Products.
To date, Mekong Capital has completed 32 private equity investments in Vietnam, of which 24 have been fully exited.
Freund sees investing in private equity in Vietnam is “getting very hot” as a lot of regional and global investors are looking for deals, and valuation is getting higher.