Vietnam fund tops up investment

Mekong Enterprise Fund II invests up to $6.25 million in a manufacturing company in Vietnam
Mekong Capital announced Friday (January 5) that its fund, the Mekong Enterprise Fund II, will invest up to $6.25 million in Ngo Han Joint Stock Company, which is one of the largest manufacturers of magnet wire in Vietnam. The fund has already made an initial investment of $1.9 million and it expects to invest more after the law on the 30% limit on foreign ownership in unlisted companies has been clarified.

This is an ongoing relationship for Mekong Capital. Its original fund, Mekong Enterprise Fund Ltd, which it launched in 2002, originally invested $1.85 million in Ngo Han in early 2004. While many investors know Vietnam is hot, many struggle to find companies they deem worth investing in. Ngo Han is considered to be one of that fundÆs most successful investments.

ôSince our first fund invested in Ngo Han in early 2004, Ngo HanÆs revenues have grown at 57% per year over those three years, while their net profit has grown at a rate of 60% per year over those same three years. This has been an excellent investment for us and we expect the strong growth to continue, especially as the company continues to expand capacity and strengthen its management team,ö explains Chris Freund, Managing Director of Mekong Capital.

The $50 million Mekong Enterprise Fund II is a private equity fund focusing on equity investments in unlisted companies in Vietnam, which at the time of the original investment, are typically about two-to-four years away from a listing on one of VietnamÆs stock exchanges.

The fund invests in fast-growing companies that are considered to have excellent management with a very strong commitment to the long-term success of the company. The fund aims to add significant value to the companies in which it invests, without being directly involved in the management of those companies.

Ngo Han, which employs around 200 people and is located in Dong Nai Province, is expected to have achieved over $35 million in revenue in 2006 in an industry that may not seem all that glamorous. Its production of magnet wire involves melting copper plate into copper rods, stretching copper rods into thin wires and coating the wires with layers of enamel, or other insulating materials. However, what it makes, we need: It produces both round and rectangular wires, ranging from regular to super-fine sizes û which are used in motors, transformers and other devices that use coiled wires to generate or transform electromagnetic fields.

Nguyen Tien, the CEO of Ngo Han says: ôthe investment of Mekong Enterprise Fund II clearly proves two things: firstly, the fund and Mekong Capital highly value the strategy and the potential of the company, and secondly they affirmed the long term relationship and support to the company for the great mutual benefit in the futureö.

Ngo Thi Thong, the co-founder and Chairwoman of Ngo Han adds: ôWe are very glad that Mekong Enterprise Fund II decided to invest more in our company. This will greatly help us to grow the company much faster, become more effective and prepare the company for a successful listing in the marketö.

Ngo Han is the second investment of Mekong Enterprise Fund II. The previous investment made by the fund is International Consumption Products Joint Stock Company (ICP), a fast-growing consumer products company which owns several leading brands in Vietnam including X-Men, Dr. Men and OCleen.
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