Mekong Capital’s Mekong Enterprise Fund II (MEF II) has completed the divestment of 100 per cent of its investment in Mobile World Investment Joint Stock Company (MobileWorld), the biggest mobile device and home appliance retailer in Vietnam.
This was the culmination of an exit process that began with a pre-listing private placement shortly before the 2014 public listing of MobileWorld on the Ho Chi Minh City Stock Exchange, and involved gradually selling blocks of shares to institutional investors approximately once per quarter after the listing. The final block of 5 million shares was sold at a price of VND165,000 per share and completed on 29 January 2018.
MEF II originally invested USD3.5 million in MobileWorld for a 35 per cent stake in 2007. The cumulative net proceeds from the sale of MEF II’s MobileWorld shares and dividends received was USD199.4 million. Over the 10.5 year holding period of this investment, it generated a return multiple of 57x in USD and an IRR of 61.1 per cent in USD, making it one of the most successful private equity investments in the history of Asian Private Equity.
Mekong Capital’s investment framework called Vision Driven Investing has consistently enabled its funds to realize high rates of return. The framework enables investee companies to create a big breakthrough vision, and achieve their vision while creating significant value creation for shareholders. MobileWorld was both an inspiration for, and model of, the Vision Driven Investing framework.
Chris Freund, Partner at Mekong Capital, says: “When we originally invested into MobileWorld in 2007, they had 7 stores and a USD10 million company valuation. Our original goal was to increase to 50 stores and a USD50 million company valuation. The success of this investment has exceeded our wildest expectations. Many factors have contributed to this great success, but at the core of MobileWorld’s success are the five co-founders: Tai, Quan, Tung, Huan and Trieu – their open-mindedness, proactiveness, willingness to improve and complementary points of view. Together they had a big vision, built an extraordinarily strong team and a strong corporate culture, put the interests of customers first, and created an unstoppable machine that consistently sets the standard for retailing best practices in Vietnam.
“It’s unfortunate that we now must complete our 10.5-year journey together with MobileWorld. Our fund that invested into MobileWorld, MEF II, was launched in 2006 and ultimately had a 12-year term, hence we needed to complete the divestment of our remaining investments in MEF II including MobileWorld in the first few months of 2018. If it wasn’t for MEF II’s limited timeframe, we would have wanted to continue as a shareholder of MobileWorld for the foreseeable future, especially as they ramp up Bach hoa XANH into Vietnam’s leading supermarket chain. There is currently no company in Vietnam’s retail sector, either foreign-owned or locally-owned, which can execute on the large scale and high standards that MobileWorld can execute. We look forward to finding other ways to partner with MobileWorld in the future.”
During its 10.5-year holding period by the MEF II, MobileWorld has grown from seven stores to over 2,000 stores today under four different retail brands: thegioididong.com, Dien may XANH, Bach hoa XANH and vuivui.com. The company has also recently announced the acquisitions of Tran Anh Digital World and Phuc An Khang pharmacy chain.
