Choosing to become private equity firm in Vietnam, could you please share more about this decision in 15 years before?
Why not a venture firm or any others?In Private Equity we have the most influence over the outcome of our investments. We see ourselves as fully responsible for the outcome of our investments. In Venture Capital (VC), there are more uncertainties about new technologies, which entrepreneurs to back, etc. However, I think VC firms such as IDG, CyberAgent and Seedcom have made some good investments and are performing well. Meanwhile, we believe in being very focused and doing a great job at Private Equity rather than trying to diversify across many asset classes. Our goal is to be the most consistently successful Private Equity firm in all emerging markets.
As one of the best value-added investors in Vietnam, what has Mekong Capital done to enhance competitiveness of investees?
We have worked with companies in many areas such as recruiting senior managers, setting clear long-term and short term goals, finding outside experts who can help to introduce best practices, management reporting, organizing training events and seminars for our investee companies, improving corporate governance, etc.
According to VCCI, among all private enterprises in Vietnam, only 2 percent of them are the big ones, 2 percent are medium and 96 percent are small ones; and up to two thirds of private enterprises in Vietnam don’t have profit yet. What do you think about this? Are you still interested in private equity in Vietnam?Yes, it’s the nature of the private sector in Vietnam that companies tend to be small. But it’s OK for us as we typically target to make investments of US$8-12 million, and there are enough companies that are the right size for us. Some other funds that are trying to invest minimum amounts of US$20 million, or even US$50 million, and a much smaller investment universe in Vietnam.
Recently, the topic of “Enhancing Enterprise Competitiveness for Global Integration” was raised and attracted most of business communities. As your opinion, what should private enterprises do to enhance their competitiveness?
The main thing private companies need to do is to hire and develop professional management, as well as setting clear measurable targets, and rewarding the management for achieving those targets. In many cases, companies should also invest more in developing a strong corporate culture based on some core values which are important for that business. And they need to be interested to learn and apply best practices from overseas
Retail is the industry in which your Funds have achieved most success; could you please share about attractiveness from this segment at the moment?
Are you still interested in this area?Yes, investing in retail in Vietnam is very attractive because currently the markets are so fragmented with many small players. Also, the quality of management of most retailers in Vietnam is quite low compared to international standards, even if comparing to regional countries like Thailand, Indonesia or the Philippines. This provides a great opportunity for investors like us who can add value and help to develop the management teams. By now, Mekong Capital had developed a strong expertise in retail.
As far as I know, MEF III has raised more than US$87 million in the committed capital. What are key segments which MEF III will invest?
MEF III will invest in consumer-driven businesses such as retail, restaurants, FMCG, and consumer services. These are the areas where we have developed a lot of expertise.
What are key factors which your funds focus on and conduct analysis before any investment decision?
The thing we focus on the most is how much a company is likely to develop its management team and apply best practices after we invest. Since the management standards in Vietnam tend to be low, whichever company in any sector does the best job of building its management team and learning and applying best practices from the rest of the world will be the winner in that sector. This is why MobileWorld is winning in mobile device retail, PNJ is winning in jewellery retail, Golden Gate is winning in the restaurant business and Masan Consumer is winning in the packaged food business.
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