Vietnam’s Mekong to more than double previous fund size – exclusive

Mekong Enterprise IV is expected to reach its $250m hard-cap by early 2020, Private Equity International understands.

Mekong Capital, a Vietnam-based private equity firm, has returned to market and could more than double the size of its previous fund, Private Equity International has learned.

The Ho Chi Minh City-headquartered firm is expected to reach the $250 million hard-cap for Mekong Enterprise IV by early 2020, according to a source with knowledge of the matter. The fund, which has a $200 million target, has been in market since early September.

Mekong collected $112 million against a $150 million target for its 2015-vintage Fund III, according to PEI data. That fund is fully invested across nine deals, the source added.

The firm declined to comment.

Fund IV is likely to have a $16 million to $17 million average cheque size across 10 to 12 businesses, the source said. Fund III had an $11 million average ticket size.

Vietnamese private equity: A beginner’s guide

Mekong’s $50 million Mekong Enterprise Fund II, a 2006-vintage, delivered a 4.6x net return multiple and 22.7 percent, according to its website. The firm’s $3.5 million investment in the now-listed MobileWorld in 2007 delivered a 61.1 percent gross IRR and 57x return multiple over a 10.5-year holding period, during which it gradually sold blocks of shares.

Its portfolio includes restaurant chain Pizza 4P, retail chain Pharmacity and English training centre Yola, according to the Mekong website.

Private equity firms completed 38 deals in Vietnam last year, a 41 percent increase from 2017 and a peak for this decade, according to the Global M&A Review 2018 from business information publisher Bureau Van Dijk. Spending more than tripled to $1.6 billion, second only to Singapore at $7 billion and on a par with Indonesia at $1.7 billion in South-East Asia.

Key drivers include a government push to privatise state-owned enterprises, improved corporate governance and a greater number of large companies suitable for private equity investment.

Vietnam’s economy also received an 8 percent boost from Q1 2018 to the first quarter of this year following a shift in production from China due to the US-Sino trade war, according to Japanese investment bank Nomura.