Mekong Capital closes fourth fund short of target

The fund initially targeted $150 million.

Vietnam-focused private equity firm Mekong Capital has closed its fourth fund, Mekong Enterprise Fund (MEF) III on $112 million, it said. The fund did not meet its target of $150 million but was more than double the size of its predecessor.

The Netherlands Development Finance Company and the International Finance Corporation are anchor investors in MEF III that has also secured commitments from new Asian investors, Mekong Capital told Private Equity International. Founder Chris Freund and partner Chad Ovel embarked on a roadshow in May 2015 and reached a first close on $75 million in November 2014. The firm declined to comment on why the fund closed below target.

MEF III will invest in Vietnamese consumer-driven business such as retail, restaurants, consumer services, as well as online companies.

MEF III expects to make 12 investments during the first three years of its operations targeting typical investments ranging from $8-15 million in both minority and buyout investments.

Mekong Capital has four funds under management including the $18.5 million Mekong Enterprise Fund I, the $50 million Mekong Enterprise Fund II and the $64 million Vietnam Azalea Fund which makes minority investments in later stage companies with imminent listing plans.

Limited partners in its funds include the University of Washington, Asian Development Bank, Swiss Investment Fund for Emerging Markets and the Belgian Investment Company for Developing Countries, according to PEI Research & Analytics.

The Vietnam-focused firm has made 29 investments in total with 17 full exits and three partial exits. Some of its investments include mobile device retailer MobileWorld, jewellery retailer Phu Nuan, pharmaceutical company Traphaco and consumer goods company Masan Consumer.

In 2014, a partial divestment from MobileWorld yielded a 21.8x return for the firm. Shortly after, also sold its stake in Vietnamese restaurant chain operator Golden Gate Joint Stock Company, netting a return multiple of 9.1x and a gross internal rate of return of 45.1 percent, as reported by PEI.

Mekong Capital employs more than 25 people in its Ho Chi Minh and Hanoi offices.