Mekong Capital celebrates a record-breaking year
Mekong Capital celebrates a record-breaking year
Given the strong rebound of the economy and growth of investee companies, Vietnam-focused funds management firm Mekong Capital ended a successful year for 2014.
“2014 is the best year for the performance of our investee companies in our 13 year history. All of the consumer-driven businesses performed well,” said Chris Freund, partner at Mekong Capital.
“In general, consumer markets are growing at attractive rates in Vietnam, especially in the provinces, and there are plenty of growth opportunities for companies that are well managed and that are implementing international best practices,” he added.
MobileWorld can be said to be the most successful investee company of Mekong Capital in 2014. The electronics retailer’s net profit was up 183 per cent in the first eleven months of the year, according to Mekong Capital.
With the opening of 124 new MobileWorld stores and eight Dienmay.com stores nationwide over the course of a year, the company’s market-share in retail of smart phones and tablets currently stands at around 27 per cent of the Vietnam market by value, and around 30 per cent by volume.
In the year of 2014, Mekong Capital also got positive news from An Giang Plant Protection, one of Vietnam’s leading agricultural companies. The Standard Chartered Private Equity (SCPE) announced in October that an investment of $90 million would be made to acquire a significant minority stake in An Giang from VinaCapital. Although Mekong Capital’s Vietnam Azalea Fund was not a seller in this transaction, the result was that its shares were revalued at 4.1x from its original investment from December 2008 and a gross IRR of 30 per cent.
Mekong Capital announced that the Vietnam Azalea Fund has been cooperating closely with SCPE and other shareholders to add value, and empower the company’s transformation from a distributor of crop protection chemicals into a total solutions provider to farmers, and a vertically-integrated rice producer.
Meanwhile, Traphaco has implemented a major transformation in its sales network, by which it now sells 80 per cent of its pharmaceutical products directly to a network of 20,000 pharmacies rather than selling via wholesales or sub-distributors.
“This will lead to significant revenue and profit growth in 2015,” said Freund.
Freund believed Mekong Capital’s framework for adding value called Vision Driven Investing to investee companies was implemental in helping the companies to grow in 2014. Some of the key components of the Vision Driven Investing include aligning with the companies around a clear long-term goal and then partnering together to achieve that goal. Often this involves active use of the third party experts to help introduce best practices.
Although Mekong Capital doesn’t get involved in the management of its investee companies, Freund said the fund management firm “spend a lot of time meeting with our investee companies.”
Based on the positive signals of the economy, including credit growth and low inflation, Freund believed Mekong Capital would continue an excellent year in 2015.
“And if TPP is approved, that will be an additional catalyst for Vietnam’s economic development. Our plans are to launch our next fund very early in 2015 and also to divest at least three of our existing investee companies within 2015,” he added.
