Mekong Capital’s Vietnam Azalea Fund exits last portfolio company for $64.5m

Vietnam-focused private equity firm Mekong Capital said on Monday it has successfully divested the entire 24.99 per cent holding in pharmaceutical major Traphaco JSC for a total consideration of more than $64.5 million.

The exit, priced at VND141,500 per share, generated a gross return multiple of 6.3x in US dollar terms, the fund manager said in a statement.

This is the last remaining portfolio company of the Vietnam Azalea Fund (VAF), Mekong Capital’s first investment vehicle established in June 2007 to focus on pre-IPO investments.

VAF had initially acquired a 5 per cent stake in Traphaco in 2007 to become its maiden overseas shareholder as the company offered strategic shares prior to its IPO. The fund subsequently increased its ownership through several on- and-off-market transactions.

Traphaco has grown to become the second largest pharmaceutical company in Vietnam, from its top 20 ranking in 2007.

During the lifecycle of the investment, Mekong Capital has also supported Traphaco in expanding its distribution network as well as moving away from selling a majority of products via wholesalers to a direct sales model that today reaches 26,000 retail outlets.

Mekong says it also helped Traphaco enhance its corporate governance through the former’s Vision Driven Investment framework.

“We have truly valued the opportunity to be an active partner of Traphaco over the past 10 years. Traphaco is now a role model for all other pharmaceutical companies in Vietnam,” said Chad Ovel, Partner at Mekong Capital.

In addition to Traphaco, VAF made six other investments since its inception, including Phu Nhuan Jewelry, tech conglomerate FPT Corp, property developers Intresco and Nam Long, Masan Consumer and agri-business Loc Troi.

The general partner completed its divestment from Loc Troi in September, collecting cumulative proceeds of over $12 million. Since the beginning of 2017, Mekong Capital has fully exited Loc Troi and Vietnam Australia International School, as well as made several tranches of partial exits from Mobile World, earning a total of $79 million.

New investments are made through its Mekong Enterprise Fund III, which was launched in May 2015 and hit final close at $112 million a year later.

Also Read:

Vietnam: Mekong Capital nets proceeds of $79m from exits in 2017