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MEF II divests from MobileWorld

Released at: 15:20, 29/01/2018

MEF II divests from MobileWorld

Photo: MEF II

Final block of 5 million shares sold on January 29.

by Linh San

Mekong Capital has announced that its Mekong Enterprise Fund II (MEF II) has completed its full divestment from the MobileWorld Investment Joint Stock Company (MobileWorld), the largest mobile device and home appliance retailer in Vietnam.

This was the culmination of an exit process that began with a pre-listing private placement shortly before the 2014 public listing of MobileWorld on the Ho Chi Minh Stock Exchange and involved gradually selling blocks of shares to institutional investors approximately once a quarter after the listing. The final block of 5 million shares were sold at a price of VND165,000 ($7.39) per share and was completed on January 29.

“MEF II was launched in 2006 and ultimately had a 12-year term, hence we needed to complete the divestment of our remaining investments, including MobileWorld, in the first few months of 2018,” said Mr. Chris Freund, Partner at Mekong Capital. “If it wasn’t for MEF II’s limited timeframe, we would have wanted to continue as a shareholder of MobileWorld for the foreseeable future, especially as they ramp up Bach hoa xanh into Vietnam’s leading supermarket chain.”

MEF II originally invested $3.5 million in MobileWorld for a 35 per cent stake in 2007. The cumulative net proceeds from the sale of MobileWorld shares and dividends received was $199.4 million. When MEF II originally invested in MobileWorld in 2007, they had seven stores and a $10 million valuation. “Our original goal was to increase to 50 stores and a $50 million valuation,” said Mr. Freund. “The success of this investment has exceeded our wildest expectations.”

Many factors contributed to the success, he added, but at the core was MobileWorld’s five co-founders and their open-mindedness, proactiveness, willingness to improve, and complementary points of view. “Together they had a big vision, built an extraordinarily strong team and a strong corporate culture, put the interests of customers first, and created an unstoppable machine that consistently sets the standard for retailing best practices in Vietnam,” Mr. Freund said.

He added there is currently no company in Vietnam’s retail sector, either foreign-owned or locally-owned, that can execute on the large scale and high standards that MobileWorld can. “We look forward to finding other ways to partner with MobileWorld in the future,” he said.

Mekong Capital’s investment framework, called Vision Driven Investing, has consistently enabled its funds to realize high rates of return. The framework enables investee companies to create a big breakthrough vision and achieve their vision while creating significant value creation for shareholders. MobileWorld was both an inspiration for, and model of, the Vision Driven Investing framework.

During MEF II’s ten and a half year holding, MobileWorld has grown from seven stores to over 2,000 today under four different retail brands: thegioididong.com, Dien may xanh, Bach hoa xanh, and vuivui.com. The company has also recently announced the acquisition of Tran Anh Digital World and the Phuc An Khang pharmacy chain.

Launched in 2006, MEF II is the second private equity fund managed by Mekong Capital. It made ten investments, of which nine have already been fully exited. The Fund’s only remaining investee company is Asia Chemical Corporation (ACC). Its other notable investments included Golden Gate, Vietnam Australia International School, and ICP.

As at December 31 it operates 1,070 thegioididong.com outlets in all 63 cities and provinces nationwide, making it the Number 1 mobile retailer in Vietnam with a 40 per cent market share.

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