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It aims to raise a maximum initial commited capital of $100 million, to be drawn down as needed. The initial closing is expected to occur on or around May 31.
Chris Freund, managing director of Mekong Capital in Ho Chi Minh City, notes that the primary investment objective is to achieve a high internal rate of return by investing in privatised companies in Vietnam. This can come during their initial privatisation or during any subsequent sale or issuance of shares, or in any other transaction and then divesting such interests after these companies list on a stock exchange. He says the fund aims to generate returns from capturing the liquidity premium between unlisted and listed companies.
Freund will look for various attributes in the fund's investee companies, such as such as strong management teams. But if a company shows a willingness to hire new people for their management teams (if that's necessary), it may also qualify for the fund.
The fund is domiciled in the Cayman Islands and will continue to operate until some time between 2017û2021, depending on when shareholders resolve to commence winding up the fund. It will be managed by a dedicated team within Mekong Capital, currently led by portfolio manager Duong Do Quyen.
Mekong Capital is the investment manager of the Mekong Enterprise Fund, which was launched in 2002, and the Mekong Enterprise Fund II, Ltd., launched last year. Both funds are private equity funds focusing on fast-growing private companies in Vietnam.
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Actively managed funds were also not found to have better odds of higher returns than more passive funds.