Exclusive: Mekong heads towards first close

The Vietnam-focused fund will make its initial close next month at a minimum of $75m

Mekong Capital, a private equity firm focused on Vietnam, is planning its first close on its latest vehicle in December as it gears up to start making investments, a source close to the matter revealed to Private Equity International.

The fund, Mekong’s fourth in the country, will make a closing on a minimum of $75 million – 50 percent of its target and hard cap. A number of investors have already made soft commitments, with the firm waiting finalise documentation.

It will raise no more than $150 million to avoid pressure to do larger deals, PEI’s source explained, adding that the firm is ready to start investing immediately. The firm typically invests in opportunities of between $8 million and $15 million.

The new vehicle, called Mekong Enterprise Fund III, is actually the firm’s fourth private equity vehicle, but its predecessor, the Vietnam Azalea Fund, had focused on pre-IPO plays in the country.

Mekong launched the new offering in April, with founder Chris Freund and partner Chad Ovel embarking on a roadshow in May, PEI reported earlier. The firm has as many as 50 LPs, largely family offices in the US, and is anticipating a high re-up rate from existing investors.

While Vietnam has suffered from a drop-off in investor sentiment recently, the firm has benefitted from its recent exit activity, demonstrating its ability to return capital to LPs.

In April, Mekong gained a 21.8x return from a partial exit of its investment in MobileWorld, a mobile phone carrier known locally as TheGioDiDong, PEI reported earlier. The firm sold 9 percent of the company via an IPO but remains a shareholder.

The firm then sold its investment in Vietnamese restaurant chain operator Golden Gate Joint Stock Company to Standard Chartered Private Equity in September, netting a return multiple of 9.1x and a gross IRR of 45.1 percent.

Once Mekong makes the first close next month, it will start investing, the source adding that it has been preparing its pipeline, with a number of potential deals in the restaurant sector.