Mekong exits Vietnam's Traphaco for $64.5m

Mekong invested Traphaco via its Vietnam Azalea Fund (VAF), initially taking a 5% stake in 2007 and becoming the company’s first foreign shareholder. VAF subsequently increased its stake through several on-and-off-market transactions to establish itself as a meaningful minority investor. AVCJ has records for an investment of $3 million in January 2008 as well as undisclosed follow-on commitments in 2010 and 2011 that secured additional 15.3% and 4.7% stakes, respectively.

During the Mekong holding period, Traphaco grew from being ranked as a top-20 player in the local pharmaceuticals space to the country’s second-largest pharmaceuticals company, according to a statement. At the time of Mekong’s initial investment, revenue totaled VND533 billion ($23.5 million), while net profit came in at VND38 billion. Revenue and net profit for the company has recently been reported in the range of VND2 trillion and VND230 billion, respectively.

Value-add efforts by the GP included support building out distribution networks by expanding the company’s operational footprint from two branches to 24 branches. The growth program also included a strategic pivot from a wholesalers-focused marketing plan to a direct sales model. In the latter stages of the investment lifecycle, Mekong focused on corporate governance improvements by helping build out the board of directors.

“We have truly valued the opportunity to be an active partner of Traphaco over the past 10 years,” said Chad Ovel, a partner at Mekong. “Throughout, Ms. Vu Thi Thuan, chairwoman, and Mr. Tran Tuc Ma, CEO, have provided visionary leadership driving the company’s rapid but sustainable growth. Together with the rest of the stable and loyal senior leadership team at Traphaco, they have built a company with excellent brand integrity, products of unquestionable quality and a first-class distribution system to reach consumers in all 63 provinces of Vietnam.”

According to local media, the buyer is a domestic pharmaceuticals company. The transaction represents the final exit from VAF, which closed in 2007 at $64.1 million. The fund’s most recent exit was completed last month with the sale of agribusiness player Loc Troi for a total return of more than $12 million and a gross multiple of 3.6x.

Mekong is currently deploying its fourth vehicle, Mekong Enterprise Fund III, which closed at $112 million in May 2016.

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• Topics
• Southeast Asia
• Healthcare
• Trade sale
• Vietnam
• Mekong Capital
• Exit
• Pharmaceuticals