The development finance institution had earlier disclosed it was mulling a proposal to invest up to $30 million in Mekong Enterprise Fund IV (MEF IV). We now understand that IFC has approved that proposal and committed an additional $30 million for co-investments with the PE fund.
IFC had earlier said that it would explore co-investments in deals that would be too big for MEF IV to invest in by itself, without divulging any details.
Mekong Capital is seeking to raise up to $250 million for MEF IV, its fifth fund overall and fourth in the Mekong Enterprise Fund series that focuses on investments in Vietnam’s consumer-related sectors.
The firm is yet to close its latest fund, according to industry sources.
An IFC spokesperson said that the organisation had committed $30 million to MEF IV in April 2020, with the condition that its commitment not exceed 20 per cent of the fund’s aggregate commitments.
“In addition, IFC also approved an allocation of US$30 million to a dedicated co-investment envelope for potential, future co-investments with the Fund. This is an internal approval and may or may not be deployed depending on the future co-investment opportunities arising from the Fund,” the spokesperson added.
IFC is not a new limited partner in Mekong Capital’s funds. The World Bank Group arm had earlier committed $15 million to MEF IV’s predecessor, which closed in 2016 at 112.5 million.
Meanwhile, the Asian Development Bank (ADB) is also considering a $20-million commitment to MEF IV.
In its disclosure, ADB said the investment in MEF IV aligned with its goals and country partnership strategy of promoting job creation and competitiveness, accelerating progress in gender equality and increasing the inclusiveness of infrastructure and service delivery, including improving access to quality education.
Half of Mekong Capital’s partners are currently women. It appointed its first two female partners — both in its investment team — in 2016. After one of them left, the firm promoted a female partner to oversee talent and corporate culture-related activities last year.
Apart from IFC and ADB, MEF IV is learnt to have obtained capital commitments from new LPs based in North Asia.
With a targeted size of more than twice its predecessor, MEF IV will write cheques between $8 million and 37.5 million per deal, about 50 per cent larger than its regular ticket sizes.
Mekong Capital has exited all investments made by its first three funds, including one launched to invest in privatised Vietnamese state-owned companies.
Editor’s note: This article was updated on July 15 to include IFC’s comment.