Initial Meeting

• Potential investee company and Mekong Capital’s Investment staff will meet to discuss the company’s intentions and to learn more about Mekong Capital’s business model.
• Mekong Capital and the potential investee company will then decide whether interests, especially the alignment on possibilities of creating the long term value shareholders are aligned for both parties to proceed further.
• Under no circumstances does Mekong Capital accept any fees from potential investee companies.
• Time frame: Case by case basis.

Appraisal

• An Investment Team led by a Deal Partner from Mekong Capital will perform a detailed investment appraisal, meet key people in the management team and develop a financial model with financial projections of the investee company.
• The appraisal process will enable Mekong Capital to identify opportunities for the potential investee company to grow and create long term value for shareholders and differentiate itself from competitors.
• The potential investee company is recommended to commence financial audit as early as possible.
• Time frame: Approximately 4-12 weeks, depends on availability of necessary information.

Agreement in principle

• Based on a financial model, Mekong Capital will prepare a Valuation Proposal of the potential investee company to be discussed with the owners. Valuation Proposal proposes what Mekong Capital believes is the fair value of the potential investee company.
• Mekong Capital will outline and agree in principle the changes that the potential investee company must undertake and the long term value creation plan that the potential investee company will commit to execute with the contribution from Mekong Capital. Examples of some areas of the long term value creation plan includes: listing plans; financial management system; corporate governance; human resource management and operational improvement.
• Then both parties will come to an agreement on conditions and valuation.
• Time frame: Approximately 2-3 weeks.

Investment Committee Approval

• Subsequent to the completion of the appraisal and valuation, the Investment Appraisal will be submitted to the Investment Committee for approval.
• The Investment Committee may approve an investment subject to certain conditions.
• Time frame: Approximately 3 weeks.

Audited Financial Statements

If the company doesn’t already have audited financial statements for a recent period by an acceptable auditor, it will be necessary to have a recent period audited by an auditor which is acceptable to Mekong Capital before the Fund can complete its investment in the company. The reason for this is so that Mekong Capital can confirm the company’s profit margins, net asset value and other factors that might have an impact on the valuation of the company.

Currently in Vietnam, Mekong Capital recognizes the following auditors as meeting its requirements as being acceptable auditors:

• PriceWaterhouseCoopers (PwC)
• Ernst & Young
• KPMG
• Deloitte

Mekong Capital has several employees with a background in auditing and is able to assist companies to prepare for their audit. For many companies, the process of preparing for the audit is the issue which is most likely to cause a delay in the completion of the investment. Therefore, we recommend that if a company is interested to receive an investment from the Fund, it take steps to ensure the accuracy of its accounting records as soon as possible. Mekong Capital can provide feedback on what those steps should be.

Implementation

• The Fund will appoint a law firm to perform legal due diligence on the investee company to ensure all legal issues are resolved to the extent possible. Time frame: Approximately 4 weeks.
• If investee company was a limited company, joint stock conversion is required before receiving an investment from the Fund. In some cases, when the potential investee company was not structured in the way that enable the Fund to invest appropriately, the Fund may require the potential investee company to be restructured before it can invest. Mekong Capital can assist with the conversion and restructuring if necessary.
• Shareholder’s Agreement, Convertible Loan Agreement negotiation and company’s Charter review. Time frame: Approximately 2-3 weeks.
• Fulfill conditions for completion and undertakings by potential investee company.
• All of these can be done concurrently.

Completion

• Subscription of shares.
• Monetary/bank transfer.
• Update Register of Shareholders by investee company.
• Issue of shares certificate.
• Time frame: Approximately 1-2 weeks.