Mekong secures final exit from Vietnam's Mobile World

The private equity firm originally committed $3.5 million for a 35% stake in Mobile World in 2007. The three-year-old company had seven stores. Growth was driven by two main factors: mobile phone subscribers in Vietnam increased from 18.9 million in 2006 to 139 million in 2014, while the injection of third-party capital meant that new store roll-outs were no longer funded through cash generated by existing outlets.

Mobile World reached 31 outlets in 2008, 209 in 2011, and 564 in 2015. There are now 1,070 retail establishments selling mobile devices under the Thegioididong.com brand, giving the company a market share of 40%. Mobile World has also become Vietnam’s leading consumer electronics and household appliances retailer, with 657 larger-format stores, and it has a further 285 locations in Ho Chi Minh City as part of a nascent mini-supermarket concept.

In addition, the company claims to be the number one online retailer, receiving more than one million daily visitors across its portfolio of websites. The nationwide store network serves as a logistics hub for the internet business; there is a 30-minute guaranteed delivery time for most orders posted online.

Mekong's first partial exit came in early 2013 when CDH Investments – a China-focused GP that makes selected investments outside its home market – acquired a 19.88% interest for around $20 million. Most of the shares came from the company founders.

Both investors then sold shares in April 2014 through a pre-IPO placement driven by a need to meet free float requirements. A 12% stake in the company – 9% from Mekong and 3% from CDH – went for $22.8 million. In the IPO itself, Mobile World listed 62.7 million new shares at VND68,000 apiece, valuing the company at approximately $200 million.

Mekong has pared its stake approximately once a quarter since the IPO, selling shares to institutional investors. The last of these block trades came on January 29 when five million shares were exited for VND165,000 apiece. Mobile World’s stock closed that day at VND123,800, giving it a market capitalization of VND39.9 trillion ($1.7 billion).

Mekong’s net proceeds from the investment are $199.4 million, including dividends. The net IRR is 61.1% in US dollar terms. The timing of the final exit was dictated by the terms of the vehicle that made the investment: Mekong Enterprise Fund II closed at $50 million in 2006 and had a 12-year term. Nine of the fund’s 10 positions have now been exited.

Chris Freund, a partner at Mekong, said in a statement that if it wasn’t for the fund life limitations, the firm would have wanted to remain invested in Mobile World, particularly given the growth potential of the supermarket concept. “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 Mobile World can execute,” he said.

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

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• Topics
• Southeast Asia
• Consumer
• Open market
• Vietnam
• Mekong Capital
• Exit