Equity firm shuffles deck

Chris Freund, managing partner of Mekong Capital, said the equity firm would reduce investment from current 15 investees to about 10. “We are focusing on doing exit and selling investments,” he said. Freund declines to reveal which companies Mekong Capital will divest from.

Freund said that was natural thing of a private equity firm because an investment  fund usually has ten-year life and specific investments are typically held for five to seven years. “We need to sell investments and launch new fund to ensure further growth of the company. That is good for us,” said Freund.

Mekong Capital has three funds at present, including the $18-million The Mekong Enterprise Fund, the $50-million The Mekong Enterprise Fund II and the $64-million Vietnam Azalea Fund.

The Mekong Enterprise Fund was established in 2002 and invested in 10 companies by the end of 2005. At this time, the fund has fully divested from 8 companies in its portfolio and will continue to exit investment from the remaining companies, as it has already complete ten year life.

The Mekong Enterprise Fund II was launched in 2006 and was mainly focused on consumer driven industries like retailing, distribution and consumer products. This fund also invests in 10 companies and Freund said the firm was working to sell few of them.

The Vietnam Azalea Fund was launched in 2007 and targets Vietnamese blue-chip companies, both privately and formerly state-owned.

Freund said a new fund would be launched shortly to replace funds that will be closed, and to continue make new investment. Each fund will just invest in around 10 companies, that he thought an ideal level for the fund.

Unlike other fund management firms such as VinaCapital, Dragon Capital or Indochina Capital which launch different funds for different asset classes, Mekong Capital just focuses on investments in private equity.

Among sectors, Freund said Mekong Capital would mainly focus on consumer driven business as a strategy of the firm. Its most successful investments to date have been consumer-oriented companies such as Mobile World, Traphaco, Golden Gate, Masan Consumer and ICP.

“Consumer product business is growing very fast right now. If you look at other companies like Vinamilk and Masan Consumer, they are still growing very well,” said Freund.

“Some people believe as an investor, we need to be diversified.  But we commit to bring added values, we can only do that when we really understand the industry and investees,” he said.