Mekong Capital proves attractive

According to Mekong Capital’s founding partner Chris Freund, the new private equity fund will focus on the company’s proven areas of expertise in retail and restaurants, fast moving consumer goods, pharmaceuticals, and consumer products and services such as education.

“When we invest in these sectors that are clearly our expertise, we can add a lot of value as a shareholder,” said Freund. “We’ve chosen not to focus on other sectors like manufacturing, real estate, infrastructure, or banking as they are outside of our area of expertise.”

Mekong Enterprise Fund III (MEF III) has raised $87 million in the committed capital so far, and the fund is aiming for a maximum of $150 million in the committed capital. It has a 10-year life and is expected to make around 10 key investments.

Unlike the company’s previous three funds where it picked up most of its investors from North America, MEF III has witnessed a notable shift to Asian investors this time around, accounting for 30 per cent of the total investors, followed by 27 per cent and 23 per cent from European and North American investors, respectively, and 17 per cent from the IFC which is a multilateral. Freund said that there seemed to be more Hong Kong and Singapore-based investors investing in private equity funds at present, whilst for the first time, Mekong Capital had some Japanese investors showing great interest and a desire to get involved in investments in Vietnam.

The local economy, in Freund’s view, is gradually improving, and credit growth, in particular, is rather promising. He claimed that this could, in turn, translate into a rising spending power. “As a consumer-driven business, as long as credit growth is happening and is stable, it is all good for consumer spending,” he added.

Freund cited MobileWorld as a successful investee of Mekong Capital. When it first opened back in 2007, MobileWorld had just a handful of locations dotted around the country. Now, however, it has expanded its fleet to 444 stores nationwide, and its growth continues apace at around 20 stores a month for 2015. According to Freund, many of the company’s competitors might say they listen to their customers and are doing what’s best for them, yet they do not use this as their organising principle. “MobileWorld, as a consumer-focused business, has, in fact, no competitors, as the CEO’s point of view is always focused on what’s best for the customers. And if he doesn’t think it’s best for the customers, he will say no, even if it’s good for the company,” stressed Freund.

Mobile World achieved a 40 per cent net profit growth rate in the first quarter of the year compared to the first quarter of 2014.