Origins of Mekong Capital

Chris Freund had moved to Vietnam in 1994, shortly after the U.S. trade embargo on Vietnam was lifted. He worked for Templeton Asset Management in Vietnam starting in 1995, where he was involved with investments including the Metropole Hotel in Hanoi (a joint venture with HanoiTourist), the Mayfair Apartments in Hanoi (a joint venture with the Vietnamese Army) and a tea processing joint venture with the Vietnam National Tea Corporation. In 1998, Templeton closed its offices in Vietnam, and Chris was relocated to Templeton’s Singapore office until early 2001.

In 1999, a world bank program called the Mekong Private Sector Development Facility (MPDF) performed a feasibility study for a fund to invest in Small and Medium Size Enterprises in the Mekong region. By mid 2000, the Asian Development Bank (ADB) took a strong interest in the project. With a desire to move back to Vietnam, Chris Freund began to collaborate with MPDF and ADB towards the establishment of this private equity fund. Mekong Capital Ltd was incorporated in March 2001 and Chris moved back to Vietnam at that time.

 

First private equity fund for Vietnam after the Asian Financial Crisis (2002)

The Mekong Enterprise Fund was launched in April 2002, with $18.5 million. Mekong Enterprise Fund was the first new Vietnam-focused fund to be launched after the Asian financial crisis. At the time, the only other fund that was actively investing in Vietnam was Dragon Capital’s Vietnam Enterprise Investments Limited. The Mekong Enterprise Fund made 10 investments from 2003 until 2005, most in family-owned manufacturing businesses.

 

Shift to consumer oriented businesses and the new generation of Vietnamese entrepreneurs (2006)

Mekong Capital launched the $50 million Mekong Enterprise Fund II in June 2006. Mekong Enterprise Fund II represented a shift in Mekong Capital’s focus to consumer driven sectors in Vietnam, and in a newer, younger generation of Vietnamese entrepreneurs. In connection with the launch of this Fund, Mekong Capital opened its office in Hanoi in 2006. The Mekong Enterprise Fund II made 10 investments from 2006 to 2011. Mekong Capital also launched the $64 million Vietnam Azalea Fund in June 2007, to focus on privatization and pre-IPO investments in Vietnamese blue chip companies.  

 

Transformation (2008)

In late 2007, Mekong Capital commenced an intensive transformation of its corporate culture, with the intention of creating a culture and a team that would deliver consistently high private equity returns by being very effective in how they worked together as a team and how they interacted with investee companies to have the biggest positive impact. This involved building the corporate culture around a shared set of values - responsibility, integrity, communication, leadership and results – creating a shared vision for the future of the company, and implementing best practices from other private equity firms. By 2009, the positive impact of this transformation was clear and in 2010, Mekong Capital was the subject of a Harvard Business School Case Study: Mekong Capital: Building A Culture of Leadership in Vietnam.
 

Vision Driven Investing (2009)

As the transformation of Mekong Capital was building momentum, Mekong Capital pioneered the development of Vision Driven Investing, which was launched in 2009 and formalized into a repeatable system by 2010. Vision Driven Investing is a private equity value creation framework which applies best practices from executive coaching, leadership development and corporate transformation / change management in a private equity context. The framework involves aligning around a shared vision with investee companies, subsequently aligning around a business plan with clear milestones and measurable targets for achieving that vision, actively tracking progress against those milestones, and partnering with the investee company to execute the plan in a way that the company is empowered to achieve the vision regardless of the obstacles encountered. Since launching Vision Driven Investing, the net profit performance of Mekong Capital’s investee companies has improved dramatically, especially those companies that have most thoroughly embraced the Vision Driven Investing approach.
 
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