Achieving a high Internal Rate of Return (IRR)

The Mekong Enterprise Fund II aims to achieve a high Net IRR by:

Being highly selective

Making only around 5 investments per year, we are highly selective about the investments that we make. In particular, we place significant emphasis on the management teams of potential investee company, as well as their commitment to achieving a listing on a stock exchange. We believe that the capability of the management team is the key determinant of success for most companies in Vietnam.

Adding value as an investor

We add significant value through post-investment assistance projects, particularly projects that will contribute to profit growth and the availability of exits. Assistance will primarily be provided to improve financial reporting systems, improve management processes, strengthen management teams and assist the companies to apply tools from Six Sigma, Lean Manufacturing, Activity Based Costing and other process improvement methodologies to achieve a high level of continuous improvement.

Fast growing investee companies

We  invest in companies that are likely to have net profit per share grow at an average rate of at least 30% per year during the period in which the Fund expects to be an investor, and work closely with the companies to help them achieve or exceed such targets.

For our first fund, the average annual revenue growth rate for our investee companies has been 28.4% between the period in which we invested and 30 June 2006. Meanwhile, average annual net profit growth has been approximately 62.0% over the same period.

Sector focus

The Fund will focus mainly on companies involved in manufacturing, branding and/or distribution of physical goods, as it is the strategy of the Investment Manager to have a strong core competence in these areas. The fund can also consider businesses in sectors which can reasonably be expected to support growth rates of at least 30% per year. The Fund will also consider investments in other sectors which it considers to be highly scalable.