Mekong Capital closes second Vietnam fund

Vietnam-focused Mekong Capital has closed a new private equity fund at $50 million, drawing more interest from private investors than it did with its maiden fund.

Vietnam-based Mekong Capital has held a first and final close for its second private equity fund on $50 million (€39 million). The final figure is at the upper limit of a $30 to $50 million target, Chris Freund, founder and managing director of Mekong, said in an interview.

The Mekong Enterprise Fund II attracted 25 investors, 50 percent of whom were private investors that comprised individuals and family offices. The fund also received $9 million from Asian Development Bank, Freund said. Approximately 48 percent of the fund comes from Europe, 27 percent, the US, and 25 percent, Asia, according to a statement from Mekong.

In comparison, private investors made up only 16 percent of the $18.5 million raised for the firm’s first fund, which drew support mostly from government-related financial institutions such as ADB, Freund said. The Mekong Enterprise Fund closed in 2002, made ten investments and is now fully invested.

With its second fund, Mekong plans to focus more on private Vietnamese companies that sell into domestic market. In the first fund, the investment focus was more on export-oriented companies, Freund said: “Since the first fund, [consumer] spending power has grown so much. Companies that are selling into the domestic market are growing the fastest.”

The firm’s average investment size is $3 million, and the fund aims to make between four and five investments per year, according to the statement.

Mekong Enterprise Fund II will invest in unlisted companies, typically two to four years away from listing on one of Vietnam’s stock exchanges. It also aims to make minority investments, usually 20-30 percent stakes, and generally focus on companies involved in manufacturing, branding and distribution.

Mekong Capital was founded in 2001, and is more than 60 percent owned by its 15-member investor team.