One advantage of Vietnam is the relative ease of listing. Mekong Capital’s funds have been involved with more than 10 successful listings on Vietnam’s Ho Chi Minh Stock Exchange (HOSE), and often achieved divestments that were made possible by the public listing. The most common route for the sale of listed shares was “off-market transactions” negotiated directly with institutional investors that were “put-through” the stock market. In other cases, our funds exited partially or fully via a placement of shares pre-IPO when a public listing on HOSE was imminent.

We have often worked closely with our investee companies to build their investor relations capabilities. Sometimes this involved the recruitment of a dedicated IR team, as crafting of key messages and media relations. We’ve also supported our investees to engage with Vietnam’s leading retail brokerage firms and the market of High Net Worth (HNW) retail investors in Vietnam who actively trade on the HOSE.

Trades Sales in Vietnam to corporate strategic investors are common, especially to Asia based corporate groups with a strategic intention to expand within Vietnam. In our experience, the most common buyers for our assets in trade sales are corporate investors from South Korea, Japan, Thailand and more recently China and even Vietnamese corporates. This fits with the profile of FDI inflows into Vietnam, which have predominantly come from East Asia since Vietnam opened to foreign investment in 1994.

Occasionally our funds exited to European corporate buyers, companies that already had substantial operations in Vietnam. For example, the sale of our investment in Saigon Gas to Total Energies SE of France was a consolidation of their TotalEnergies LPG Vietnam Company that was already a leading player in the market at that time under the brand Elf Gas.

Looking forward, we expect greater economic integration between China and Vietnam, and therefore we expect an increasing inflow of inbound M&A from Chinese corporate investors as well as China-based PE firms. Meanwhile, we expect strong interest from Japanese, Korean and Thai corporate investors to continue.

Mekong Capital has always been positioned as a Series A investor, and in most cases was the investee company’s first Private Equity investor.

Typically these investment sizes have been too small for regional or global PE firms to consider. Lately, our investment sweet spot has been $10-30 million. In contrast, many regional funds have minimum in investment sizes of $50 million, while global PE firms are often looking for deals with a $100 million minimum or even higher. As such, there have been cases in which our funds divested to regional or global PE firms after the investee companies were large enough. The divestment of Vietnam Australia International School (VAS) to TPG Growth is one such example.

Mekong Capital maintains close relationships with a wide range of regional and global PE firms that are looking for investments in Vietnam, and regularly meets with the senior Partners of those firms. We see ourselves and other Private Equity firms as collaborators and partners, not competitors.

Occasionally our investees have been sold to local Vietnamese investors. These were typically private investors that were part of our network of relationships developed as a result of operating in Vietnam since 2001.

These exits tended to be smaller companies which were not listed, and for which hiring a reputable investment bank to manage an organized auction or sales process was not feasible due to the small size. In those cases it often falls upon us to find the buyers ourselves, so our reputation and extensive network provide us with an advantage in finding suitable private Vietnamese investors.