Mekong Capital’s vision sees new opportunities

They not only get more profit from investee companies, but also help them to grow faster and more sustainably. Peter Goodson, chairman of the Mekong Value Optimisation Board, shares his secrets with VIR’s Linh Mai.

What is vision driven investing, and how is it allowing Mekong Capital to generate higher returns in Vietnam?

I was  as an early stage partner at private equity firm Clayton, Dubilier & Rice. Clayton, Dubilier & Rice buys a company then works with movement to improve efficiency on  operations  and helps it grow three or four times faster by partnering with  management. It is the same in Vietnam. We go in and help businesses grow in a way that they probably never imagined they could. There are two Mekong approaches. One we call the value optimisation board, chaired by myself. We use a small group of former chief executive officers and practitioners who are experts in the field in which they are operating. Traphaco is an example. As part of the initial proposal, we would work closely with the management team to create greater efficiency and boost growth. We would help expand their margins and accelerate growth as well as formulate specific plans to reach our targets. The second method is when we introduce a high powered executive who is a CEO coach as we did with MobileWorld. Here we have just completed a renovation of store layout strategy as you will see in the new MobileWorld store, boosting sales and empowering the customer to make better choices faster. Over the years, we have created vastly improved customer experiences. Now we go and help Vietnamese businesses learn more and teach them how to be more effective, and how to be the best in the region, not just in Vietnam.

To help Vietnamese companies grow faster, you must have a team of advisors to study the market, how do you make sure they understand the particulars of doing business in Vietnam?

When I invest in Mongolia, Canada or Vietnam, I have to know how to analyse the local market, who I can trust, understand the culture and understand the differences between a country like Vietnam and other countries. At Mekong we have a team of advisors both inside and outside Vietnam. So we work with our Vietnamese partners here locally the same way we do in the US - from the local scene first and then outsider advisors there to supplement their expertise. But local insight is the key.

Mekong Capital is pioneering the application of the vision driven investment model in Vietnam, what difficulties do you anticipate in applying this new system?

I see three challenges. One is finding a leadership team who really wants  to succeed. A team who are not  just talking but really want to succeed. Two is understanding the business model, the competitive landscape in the  marketplace  and then calibrate the potential of the business. Third is finding a way to offer an advantage from our ownership involvement. We don’t just invest in any old company, we invest in companies because we think we can do something differently to help them grow three or four times faster and more profitably. We have to analyse each case and scope with management what the new possibilities might look like.

What is the most important aspect of vision driven investing?

Perhaps the most importance is to be a great partner for the management team in Vietnam. You can’t tell people what to do. You have to be able to put together a convincing case, that really makes sense. You have to develop a trust and a relationship. We have no other agenda, it’s very clear, we are on their side in building a great business of world class scale.