Initial Meeting

  • Potential investee company and Mekong Capital’s Business Development Manager 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 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 Primary Client Manager 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 make improvements or differentiate itself from competitors.
  • The potential investee company is recommended to commence financial audit as early as possible.
  • Time frame: Approximately 3-12 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 value-added work that Mekong Capital will contribute to make the company successful. Examples of these includes: listing plans; tax; audited financial statements; corporate governance; company’s Charter review; human resource and lean manufacturing.
  • Then both parties will come to an agreement on conditions and valuation.
  • Time frame: Approximately 2 weeks.
 

Investment Committe 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 Mekong Enterprise 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

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 Mekong Enterprise 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. There are also a number of benefits to having good accounting systems which are highlighted in Mekong Capital’s report on the Benefits of Strong Accounting Systems.

 

Implementation

  • MEF II 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 MEF II. Mekong Capital can assist with the conversion if necessary.
  • Shareholder’s Agreement negotiation and company’s Charter review. Time frame: Approximately 2-3 weeks.
  • 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.
 
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