Our Funds

Mekong Enterprise Fund II

Vintage

2006

Status

Wound-up

Size

US$50 million

Our first shift towards the consumer sector began

Mekong Capital Story - 2006 A shift towards consumer businesses

ICP’s most famous brand: X-men

Based on our experience in Mekong Enterprise Fund, we started to shift our focus towards the consumer sector with Mekong Enterprise Fund II (MEF II), which was launched in June 2006 with $50 million in committed capital.

Starting with our first investment, International Consumer Products (ICP), we partnered with two enthusiastic entrepreneurs, backed by international experience, and we found it was so easy to work with them. Since then, we have preferred to invest in consumer businesses, but it was not exclusively consumer-focused.

Thus, although we still had some non-consumer investments, the Fund had represented a shift in Mekong Capital’s focus to consumer-oriented business and a newer generation of Vietnamese entrepreneurs with a strong commitment to managing companies based on best practices. Between 2006 and 2011, MEF II made a total of 10 investments.

Learning from the mistakes of MEF, we found a new way to add value

Unlike Mekong Enterprise Fund I, when we had tried to add value but failed, we committed to find a new way of adding value that would result in better performance. From 2008 to 2010, concurrent with Mekong Capital’s transformation process, we developed and rolled out the Vision Driven Investing framework. We were learning from what was working at our investee companies and trying out new approaches to continuously refine the framework until it reliably led to breakthroughs in performance.

The first and lasting impacts of Vision Driven Investing framework

Across the companies who were open to the Vision Driven Investing framework, they steadily grew over the years and had breakthroughs in their performance. But some of MEF II’s investments chose not to apply the framework, and those turned out to be the worst investments. Some of the Fund’s well-known successes included Mobile World, Golden Gate, Vietnam Australia School (VAS), and ICP.

MEF II’s best example of the Vision Driven Investing framework was Mobile World, which generated a return multiple of 57x in USD and an IRR of 61.1% over 10 ½ years, making it one of the most successful private equity investments in the history of Asian Private Equity.

Inside The Gioi Di Dong’s store

One of the most successful funds in Asian Private Equity

In August 2018, MEF II successfully divested 100% of its final remaining investment, which resulted in the Fund delivering a net return multiple of 4.6x and a net IRR of 22.7% for its investors. This has marked one of the most successful funds in Asian Private Equity.

The lessons learned from MEF II significantly influenced the investment criteria and value creation approach of Mekong Enterprise Fund III.