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

Mekong Capital's investment team. Photo from the company's website.

Vietnam-focused private equity firm Mekong Capital has secured a total of $79 million from exits for its funds this year to date, with the latest being the divestment of remaining shares from agricultural company Loc Troi Group.

Mekong Capital, which is managing four investment vehicles, said on Monday that its funds have fully exited Loc Troi and Vietnam Australia International School and made several partial sales of electronics retailer Mobile World since the beginning of 2017.

Vietnam Azalea Fund, the PE firm’s maiden vehicle, on September 28 completed full divestment from Loc Troi to earn cumulative proceeds of more than $12 million at a selling price of VND68,000 ($3) apiece.

That amount includes a consideration of $9.2 million from the disposal of the fund’s 75 per cent shareholding in July 2017. The buyer of the first sale was learnt to be an Asia-listed equity investment fund.

After holding the investment for eight years, Mekong Capital said the exit generated a gross return multiple of 3.6x and a gross IRR of approximately 18.7 per cent (both in US dollar).

The last remaining portfolio company under Vietnam Azalea Fund is pharmaceutical firm Traphaco.

Meanwhile, the Mekong Enterprise Fund II disposed its entire shares in Vietnam Australia International School in April 2017 to global alternative investment firm TPG.

The fund announced on Monday that it had divested the education portfolio for more than $25 million, resulting in a gross return multiple of 4.5x (including dividend received) and a gross IRR of 25.8 per cent over the six-year holding period.

In addition, the $50 million fund continues to divest from Mobile World, in which it made its first investment in 2007. The latest partial exit last month was worth approximately $18 million, from which the fund realized a gross IRR of 62.6 per cent and gross return multiple of more than 133.2x.

Apart from Mobile World, Mekong Enterprise Fund II still holds a stake in Asia Chemical Corporation, a portfolio company since 2011.

Last year, Mekong Capital’s funds made four full exits including Phu Nhuan Jewelry, FPT Corporation, and real estate developers Intresco and Nam Long as well as several partial exits of Mobile World.

In 2015, the Ho Chi Minh City-headquartered private equity fund manager launched its fourth fund, the Mekong Enterprise Fund III, with its final close at $112 million in May 2016.

The fund has made six investments including English training centre operator Yola, logistics firms Nhat Tin and ABA Corporation, pawn shop chain F88, Ben Thanh Jewelry, and restaurant operator Chao Do (re-branded from Wrap&Roll).

“By applying its well-proven investment framework called “Vision Driven Investing”, Mekong Capital has successfully added value and helped grow all its investee companies, and therefore, earned back much higher return compared with its initial investments,” Mekong Capital said in a statement.

In an earlier interview with DEALSTREETASIA, Chris Freund, founder and partner of Mekong Capital, said funded businesses are encouraged to apply the framework and commit at least a 5x return.

Also read:

Vietnam: Mekong Capital exits 75% of its holdings in Loc Troi for $9.2m

TPG to take majority stake in Vietnam Australia School; Mekong Capital, MAJ exit

Vietnam 2016: Mekong, KKR, Vinacapital record PE exits

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