Mekong, CDH complete partial exit from Vietnam’s Mobile World

The Vietnam-focused GP sold 5.65 million shares, or a 9% stake, at VND85,000 apiece for a total consideration of VND480.2 billion ($22.8 million). The price, plus dividends received, represents a 21.8x increase on the adjusted price per share at which Mekong originally invested.

The balance of shares - 1.85 million, or a 3% stake - was sold by CDH, which has also gained on its initial investment. The placement was 2.5x oversubscribed and allocated to six foreign institutional investors plus Vietnamese retail investors. Its purpose is to meet free float requirements.

The IPO will see the total public share issuance reach 62.74 million shares, valuing Mobile World at $253 million, based on the placement price. Other sources have said the valuation could reach as high as $280 million by the time the company lists on the Ho Chi Minh exchange in July.

Mekong and CDH will not be selling any more shares via the IPO.

Chris Freund, Mekong's partner responsible for the Mobile World investment, praised the contribution of the company's board of directors and management team.

"Mobile World's success is due to their open-mindedness about learning best practices from outside, their great ability to successfully implement those best practices in Vietnam, and their commitment to customer satisfaction. Mobile World is a great example of what it looks like to build a robust management team and a strong corporate culture in Vietnam," he said in a statement.

Mekong invested $3.5 million in Mobile World in 2007, taking a 32.5% stake. The private equity firm cut its holding to 25.8% by selling shares to CDH in early 2013. Following the private placement, its stake has fallen to 14.3%. China-focused CDH, which makes selective investments outside of its home market, took a 19.88% interest for around $20 million, mainly acquiring shares from the founders.

When Mekong invested in Mobile World, which operates under the The Gioi Di Dong brand, it had just seven stores, but the PE firm was impressed by the founders. There were five of them, a relatively unusual dynamic in Vietnam; they came from relevant professional backgrounds; and with the exception of the chairman they were all in their mid-30s.

Mobile World rode the wave of growth that saw the number of mobile phone subscribers in Vietnam rise from 18.9 million in 2006 to 131.6 million in 2012. The store count rose to 31 in 2008 and then 211 in 2011.

The company expects to have 253 stores by the end of this year. It controlled more than 20% of the mobile phone retail market in 2013 and wants to be at 30% by 2016 as the market consolidates further, squeezing the mom-and-pop segment.

Mobile World also wants to boost its online business. While the market leader, only 6% of revenues come via e-commerce and the goal is to double it by 2015.

Three years ago the company expanded into the consumer electronics space, under the Dien May brand, and has built up a network of 13 stores. Twelve more will be opened this year.

Mobile World recorded $452.3 million in revenue for 2013 and the company is looking to reach at least $600 million this year and $900 million by 2016. Profit is forecast to come in at $21 million for 2014 - up from $12.3 million last year - and then $32.1 million by 2016.

Viet Capital Securities managed the private placement.

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• Topics
• Exits
• Southeast Asia
• Consumer
• Vietnam
• Consumer
• Exit
• IPO
• Southeast Asia
• CDH Investments Management
• Mekong Capital