Percent Ownership of any company

The Vietnam Azalea Fund aims to hold 5-20% of the shares of the companies in which it invests. However, in some cases the Fund will consider reinvest in investee companies due to shorter holding periods.

Minimum and Maximum Investment Size

The Fund typically expects to make investments ranging about $4 million to $15 million. However, in some cases the Fund may make investments which are smaller or larger than this depending on the circumstances.

Stage of Development

The Fund aims to focus on early stage privatizations and privatized companies approximately 1-2 years before the company plans to be listed on Vietnam Stock Exchange.

Typically a company would have expected revenues at least $20 million in the current year to be of sufficient size for the Fund to consider as a potential investment opportunity.

The Fund may not invest in start-ups, which we consider to be companies with an operating history of less than one year.  

Sector focus

No restrictions on the sectors in which the Fund can invest.

Corporate Governance and Transparency

The Fund requires that companies in which it invests meet high standards in terms of financial reporting, including having their accounts audited by a reputable auditing company at least on an annual basis. The Fund also requires that companies in which it invests meet high standard of corporate governance, especially so that the rights of minority shareholders, such as the Fund, will not be violated. In particular, the Fund, will not invest in companies that have conflicts of interest between the shareholders and the company itself, such as through related party transactions.

Key Issues Considered in an Appraisal

When considering a potential investment for the Fund, the most significant factors considered by Mekong Capital relates to the quality of management team, including the senior management team’s commitment to continuously strengthening the management team. This is because we believe that the most significant factor that determines the success of any company in Vietnam is the capability and characteristics of the management team.

Likewise we can only consider investments in companies with a serious commitment to listing their shares on Vietnam Stock Exchange, and therefore willing to make all of the changes required for a successful listing. These companies should have a strong focus on creating shareholder value as their overall objective.

Of course we also consider other factors when performing an investment appraisal.

Exit strategy

The Fund does require an exit strategy. This means that there would be a plan in place for allowing the Fund to eventually sell its investment in the company within 2-3 years from the initial investment. Usually this plan involves a listing of the company’s shares on a stock exchange in Vietnam. However, the Fund is also open to other forms of exit opportunities.

Please note that when the shares of an investee company are listed, the Fund may continue to hold its shares in that company.