07:18 (GMT +7) - Wednesday 24/10/2018

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MEF II makes final divestment

Released at: 14:29, 10/08/2018

MEF II makes final divestment

Photo: ACC

Final divestment sees Mekong Enterprise Fund II among most successful in region.

by Linh San

The Mekong Enterprise Fund II (MEF II) has successfully divested 100 per cent of its final remaining investment, which resulted in it achieving a net return multiple of 4.5x and a net internal rate of return (IRR) of 22.5 per cent for its investors.

The last divestment was from the Asia Chemicals Corporation (ACC) for a total consideration of $8.9 million, generating a gross return multiple of 2.6x and a gross IRR of 15.1 per cent.

“The completion of the sale of the final holding in MEF II brings to a close the life of what has proved to be a most rewarding fund investing in new and fast-growing companies in Vietnam,” said Mr. Jeremy Paulson, Chairman of MEF II. “MEF II, through its Investment Manager, Mekong Capital, found an interesting range of investments that fully reflected the rapidly changing consumer sector in what was a fast-growing economy. This has resulted in a highly successful investment for MEF II’s shareholders.”

The Fund initially invested $3.8 million in ACC in 2011, which was its tenth and final investment. Established in 2001 as a privately-held company in the food industry, ACC has pivoted into a leading distributor of high-quality specialty ingredients, chemicals, non-oil related commodities and other materials, sourcing from worldwide suppliers and selling to a wide range of leading enterprises in Vietnam. ACC achieved a cumulative annual net profit growth rate of 18 per cent over the period of the investment.

Launched in 2006, MEF II is the second private equity fund managed by Mekong Capital. Notable investments included Mobile World (Vietnam’s largest nationwide retailer of mobile devices and consumer electronics), Golden Gate (the leading restaurant chain operator in Vietnam), Vietnam Australia International School (a leading private bilingual K-12 school in Vietnam), Mai Son (a leading fashion retailer), and ICP (personal care products).

MEF II completed the sale of its last remaining 5 million shares in Mobile World in January 2018, resulting in a 56.9x gross return multiple and 61.1 per cent gross IRR, making the investment one of the most successful in the history of Asian private equity. Prior to that, the Fund generated a gross return of 4.5x and 9.0x for its investments in Vietnam Australia International School and Golden Gate, respectively.

“We are delighted that MEF II and its investee companies have been a great success over the last 12 years,” said Mr. Chris Freund, Partner at Mekong Capital. “MEF II represented a critical turning point in Mekong Capital’s history as it was the fund in which we started to focus on consumer-driven investments and also comprised the initial companies that applied our Vision Driven Investing framework. We are committed to continuing to apply this framework to consistently deliver excellent performance and to reinvent private equity in emerging markets.”

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