mekong capital a new e … · 20.05.2004 · journey kpi-linked bonus systems agile a/b testing...
TRANSCRIPT
A NEWSTANDARD
IN PRIVATE EQUITY FOR CONSISTENTLY
SETSMEKONG CAPITAL
GENERATING RETURNS
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ABA COOLTRANSBACH HOA XANH
PIZZA 4P’SYOLATHEGIOIDIDONG.COMDIEN MAY XANH
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TAM THAI TUCHIN-SU FOODS
NAM NGUGOGI AS
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SUNG QUAN LAU DE TU XUYENK-PUB KOREAN GRILL
LAU BO SAIGON VI VU
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AMEN
37 S
TREE
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MAGIC PANVUVUZELAKICHI-KICHICOWBOYS JACK’SSUMO BBQBIACRAFTPHARMACITY
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CUU
DARU
MA
FPT
PEDR
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O COACHACCESSORIZEMAXMARACHRISTIAN LOUBOUTIN
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CONTENTS
05 Private Equity Pioneer06 History Of Mekong Capital08 Investment in Customer-Driven Businesses09 Recognized for Excellence at Adding Value11 Best Practices 12 Our Team14 Our Culture 16 Vision Driven Investing 3.018 Vision19 KPIs20 Generating Breakthroughs21 CoreValues⁄Culture22 ManagementTeam⁄HRCapability24 Corporate Governance25 Outside Experts26 Customer Driven27 Focus28 Digital Transformation29 Delegation&Accountability30 Current Investments32 Pizza 4P’s33 Pharmacity34 Vua Nem 35 Chao Do36 ABA Cooltrans37 F8838 Nhat Tin Logistics 39 YOLA40 Some Of Our Exited Investments
Mekong Capital was the first private equity investor in Vietnam and has developed deep expertise as a result.
PRIVATE EQUITY PIONEER
FUNDS
FULL-TIME PEOPLE IN HO CHI MINH CITY& HA NOI
PRIVATE EQUITY INVESTMENTS
35
INVESTMENTSFULLY EXITED
26
30+
6 7
HISTORY OFMEKONG CAPITAL
Mekong Capital Building a Culture of Leadership in
Vietnam
2011Vision Driven Investingpioneered & implemented
2020The Birth of Ontological Private Equity
2001Early focus on SME Export Manufacturing companies
2008Mekong Capital corporate culture transformation2006
Shift towardsconsumerbusinesses
2010Corporate Culture Transformation Completed-HBSCase-studyPublished
8 9
INVESTMENT IN CUSTOMER - DRIVEN BUSINESSESMekong Capital is a Vietnam-focused Private Equity firm, specializing in consumer driven businesses. Mekong Capital’s investee companies are typically among the fastest growing and market leading companies in Vietnam’s consumer-driven sectors such as retail, restaurants, consumer products and distribution. These companies are typically well-established companies in their sectors, but operate in fragmented and fast growing markets which present attractive growth opportunities.
RECOGNIZED FOR EXCELLENCE AT ADDING VALUE
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Peter Goodson Kimberly McGinnisClaudia Zeisberger
Mekong Capital’s Operating Advantage Boosts the Value in Golden Gate Restaurants Exit
August 2015
Case studies
Mats Lingblad
TRAPHACO: CHOICES FOR THE FUTURE
6 August 2013
Coller Institute for Private Equity
Eli TalmorRichard Turner Adolfo Vinatea
Mekong Capital: The Importanceof Corporate Culture in Emerging Markets Private Equity
February2010
CHRISTOPHER MARQUISVINAY GANTIKEVIN SMITHDOUG GUTHRIE
Mekong Capital: Building a Culture of Leadershipin Vietnam
16 July 2010
Andrew DeliosMarkus Taussig MEKONG CAPITAL AND MOBILE WORLD(A) Growing a US$100 million company inVietnam;(B)BobWillet;(C)Venturinginto new countries and segments
4 May 2018
BESTPRACTICES
Net PromoterScore
KPIscustomer
touch-points
recr
uitm
ent
custo
mer
insig
ht re
sear
chcustomer-drivenvs. product-driven
SKU
sel
ection
boar
dm
eetin
gs
in-storeexperience
Digital Transformation customer journey
KPI-linked bonus Systems
agile
A/B
tes
ting
dist
ribut
ion
Vision Driven Investing
breakdown-to-breakthroughindependent Directors
supply chainBI reportdigital marketing
managementreporting
listening to customers
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MekongCapitalhascultivatedthebestteaminprivateequityinVietnam.
193 30+combinedyearsof experience at Mekong Capital teammembers
OUR TEAM
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OURCULTURE
Mekong Capital’s corporate culture is the source of our effectiveness. Wehave invested extensively in developing a team that lives our core values.
JEROMOSITYRelating to other people as their commitments, intentions,possibilitiesandinherent goodness. Empowering others.
SPRINGTHROUGHInspiring ourselves and others to step out ofcomfortzones,playabiggergame,andchoose empowering contexts which lead to newactionsandbreakthroughresults.
VICTORANCEFearless and relentless perseverance until the goal is achieved regardless of whatever obstaclesseemtobeintheway.
BEAUTEGRITYHonoring our word(1) so that everything works. Working together as a unifiedpowerful force.
GENESISChoosing the view of life that we are the source of what we choose, what actions we take, what impact we have and how the world materializes around us. Being the cause rather than the effect.
RESULTERSHIPHolding ourselves and others accountableto organize around results and do whatever isnecessarytoproduceresults,butalwaysin a way that is consistent with our core values.
CORE VALUESCOMMUNIPLETECommunicating in a complete and direct way so that nothing is in the way, misunderstood or unhandled. Getting the otherpersonandbeinggotten.
INQUISITYAthletic inquisitiveness. Relentlessly pursuing the root causes and key drivers. Pushing the boundaries in generatinggame-changing insights.
(1)Honoring our word includes doing what we said we would do, doing what we know to do, doing what is expected of us by those with whom we wish to have a workable relationship at work, standing behind what we assert to be true, being and acting consistent with what we stand for, and honoring our Company’s Code of Ethics, legal and regulatory commitments.
VISIONFULFILLED
CORE FRAMEWORK EXTERNAL RESOURCES
CUSTOMERDRIVEN
CO
RPORATE GOVERNANCE
OUTSIDE EXPERTS
CORE VALUES& CULTURE
BO
NUS SYSTEM
MA
NAG
EMENT TEAM
DRI
VERS & OPTIMAL PATHW
AY
BUSINESS INTELLIG
ENCE
AN
ALYT
ICS
DIGITALTRANSFOMATION
DELEGATION & ACCOUNTABILI
TY
GENERATIN
G B
RE
AK
TH
RO
UG
HS
FOCUS
In
Out
PEOPLE SCALABILITY
KPIs
VISION
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Mekong Capital’s Vision Driven Investing approach is a framework for adding value to our investee companies whichisbasedonbestpracticesinprivateequity,strategyconsulting, change management and executive coaching.
VisionDrivenInvestinghasbeenrevisedseveraltimesbasedonouractualexperienceofwhatworkedbest,andwhatdidn’twork, at our investee companies over the last 16 years.
VISION DRIVEN INVESTING 3.0
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VISION
The company has a clear goal for its future, and all key stakeholders are aligned and working together to achieve that sharedgoal.Itisanambitiousgoalthatrequiresorganization-widebreakthroughsinperformanceandcapability.
The company has identified which actionable short-termtargets are most critical or impactful for achieving the Drivers & Optimal Pathway and has organized the team around delivering those targets.
KPIs
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GENERATING BREAKTHROUGHS
Whenthecompanyisnotontrackforachievinganytarget,wecalla“breakdown”ratherthanaproblemtobeavoided.Breakdowns are consistently used as an opportunity to get to thesourceoftheunderperformance,andcausebreakthroughsin future performance. Consequently, the company is rapidly improvingitsperformanceasaresultofbreakdowns.
CORE VALUES ⁄CULTURE
The company has a strong culture in place built aroundcorevalueswhichareactionableandwellalignedwith theVision. Employees are reliably being and acting from thecorevalues,contributingtoextraordinaryperformanceintheareasaddressedbythecorevalues.
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MANAGEMENTTEAM ⁄ HR CAPABILITY
The company has a world class management/leadership team in place for each key management position: each person can leadtheirteamtoreliablydelivertheresultsforwhichtheyareaccountable.Thecompanybringsoutthebestinpeople,and has appropriate resources and programs to attract, retain and develop an extraordinary team.
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OUTSIDEEXPERTS
Thecompanyproactivelyfindsandengagesthebestoutsideexperts,consultants,advisorsandcomparablecompaniestoquicklylearnandapplybestpractices,andexpertise,whichwould otherwise take the company much longer to discover on its own.
CORPORATE GOVERNANCEThe Board of Directors is organized around the company achieving its Vision. Each Board member has somethingvaluableandrelevanttocontribute.Withactiveparticipationby all Board members, a collective intelligence emergesthrough inclusive conversations at the Board meetings which lead to valuable new insights, initiatives or otherbreakthroughs.TheBoarddoesnotinterfereinmanagementdecisions,butratherempowersthemanagementwhileholdingthemanagementaccountableforresults.Thebestinterestsof all stakeholders are represented, including customers, employees,shareholdersandthebroadercommunity/planet.
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FOCUS
The company values focus over diversification, and simplicity overcomplexity.Thecompanyexecutesreliablyandgrowsfastbecausetheyarefocusedondoingalimitednumberofthings very well, while continuously simplifying to remove friction for customers and employees. They prioritize and allocatepeopleandresourceswhereitwillhavethebiggestimpact. The pursuit of focus applies to all levels such as majorshareholders’ interests,numberofbusinessunitsorbusinessmodels,non-coreinvestments,numberofstrategicinitiativesunderwayandbrandmessaging.
CUSTOMERDRIVENThe company is organized around customers, including listening to customers to improve customer experience, identifying actionable insights about specific groups ofcustomers, ensuring sufficient focus on themost valuablecustomers, designing customer journeys and customer experiences that fulfill on the company’s brand strategy,maintaining an active relationship with customers through engagement and loyalty programs, and acting in the bestinterests of customers.
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DELEGATION & ACCOUNTABILITYNo person is a significant bottleneck in the company.Accountability and decision rights are clearly delegated,with clear job descriptions and performance expectations.Decisionsaremadequicklybyonepersonwithaccountabilityto do so, or small cross-functional groups. People on the front linesareempoweredtomakerelevantdecisionsandcanberelied on to do so in accordance with the core values. KPIs are effectively cascaded down throughout the organization, andpeopleareheldaccountableforresults.
DIGITAL TRANSFORMATION
The company leverages the full power of digital transformation to automate business processes and create a scalableinfrastructure for growth, including an agile mindset, data-informed experimentation, e-commerce, online/offline integration, targeted digital marketing, a robust businessintelligence platform, and seamless integration of critical businessprocessesacrossfunctions.
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Our investee companies are among the fastest growing, most well managed & market leading companies in Vietnam.
CURRENT INVESTMENTS
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Pizza4P’soperateswithFarm-to-Tableconcept:homemadecheese and local ingredients and vegetables are freshlyproduced in Dalat. Pizza 4P’s menu consists of a variety of classic Naples style pizzas as well as Japanese inspired fusioncuisinewhichbringsouttheflavorsofJapan,ItalyandVietnam.Itsrestaurantsettingwithpizzasbakedinakitchentheater is always a showstopper for its customers.
AsofDecember2019,Pizza4P’shas17 restaurants across its chain in Ho Chi Minh City, Hanoi, Danang and Nha Trang. Pizza 4P’s popularity is so high that reservations normally needtobemadeuptooneweekinadvance.
PharmacitywasestablishedinMay2011andisoneofthefirstcutting-edge pharmacy retail chains in Vietnam. Pharmacity retailsbothVietnamesetraditionalandWesternmedicines,aswellasbeautyproductsandvitamins.Availableitemsatthestoresaresourceddirectlyfromauthorizeddistributorsandmanufacturers, rather than wholesalers or traders, to serve its customers with the highest quality authentic products.
As of December 2019, Pharmacity has expanded its storenetwork significantly to over 250 stores in Ho Chi Minh City, Can Tho, Binh Duong, Vung Tau, Hanoi, Dong Nai and Danang. By 2021, Pharmacity plans to enlarge its network to more than 1000 stores with national presence across Vietnam.
Number of restaurants:
pre-investment(2018):
post-investment(2019):8 17
Number of stores:
pre-investment(2017):
post-investment(2019): 54 254
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Establishedin2007byagroupof3co-founders,VuaNemistheleadingretailchainofmattressesandbeddingaccessoriesinVietnam.Thecompanyoperatesane-commercewebsiteVuanem.com.
WhilemostmattressretailersinVietnamareshowroomsfora single brand,VuaNemstores differentiate by offering amodern shopping experience with a wide range of mattress typesandmattressbrands.
post-investment(2019): 34pre-investment
(2017): 59Number of stores:
RedWok,originallynamedWrap&Roll,wasfoundedin2006byaVietnameserestauranteurwhosefamilyhasbeenintherestaurantbusinessforthreegenerations.Thecompanyhasbeenreestablishedasarestaurantholdingcompany,targetingVietnam’s casual dining segment. The focus for expansion is throughorganicallygrowingitsexistingbrands(Wrap & Roll and Lau Bo Sai Gon) as well as acquiring successful concepts positioned for growth.
Inearly2018,RedWokacquiredaminoritystakeinQuanUtUt,whichoperatesachainofBBQandcraftbeerrestaurantsin Ho Chi Minh City.
post-investment(2019):
post-investment(2019):
114
Number of restaurants:pre-investment
(2016):pre-investment
(2017):
268
RED WOK
QUAN UT UT
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ABA is the leading integrated cold-chain operator providing lastmilesolutions intheVietnammarket.AsofDecember2019, the company owns and operates 262 refrigerated trucks and two cold storage facilities with 37,000 pallets of storage in Hanoi and Ho Chi Minh City. ABA provides several types of last mile cold-chain logistic services, focusing on:
• Scheduled and on-demand delivery to retail outlets• Management of cross-docking facilities• Temperature controlled storage and value-added services• Last mile cold-chain assurance for partners
Number of owned truckspre-investment (2016):
Cold storage facilitiespre-investment (2016):
50 post-investment(2019):
post-investment(2019):
26220 Hanoi HCMC
Foundedin2013by3youngentrepreneurs,F88isthepioneerand leading chain of collateralized lending stores in Vietnam, targeting small businesses and unbanked consumers whoneed quick cash. They primarily lend against motorbikes,cars,motorbiketitles,cartitles,laptopsandsmartphones.
ByDecember 2019, the company has over 120 stores inHanoi and some Northern provinces near Hanoi.
post-investment(12/2019):136pre-investment
(01/2016): 97,969Accumulated number of customers:
38 39
NhatTinwasestablishedinearly2015byagroupofseasonedveterans in the Logistics sector in Vietnam. The company is a provider of warehouse fulfillment and courier services. Nhat Tin is the market leader in the B2B sector, servicing leading retailers suchasMobileWorldGroup, FPTShopandotherinstitutional clients such as Samsung.
AsofDecember2019,thecompanyoperates279trucksandhasanestablisheddistributionnetworkofover250postallocations throughout Vietnam.
post-investment(12/2019): 10,000 22,000pre-investment
(3/2017):
Number of shipments per day:
YOLAwasfoundedby3co-foundersin2009.YOLAprovideskids English training (5 -10 years), junior English training (10 -15 years), foundation English training (16 years+) and academic test preparation via 15 training centers in HCMC and1inHanoi.Thecompanyfocuseson“academic”English,including scoring high on tests of English proficiency, rather than conversational English. Test preparation also includes entrance exams such as SAT, GMAT, etc.
post-investment(2019):
post-investment(2019):
pre-investment(2016):
pre-investment(2016):
Number of annual enrollments:
Number of centers:
11,024
4
25,827
16
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SOME OF OUR EXITED INVESTMENTS
MWG: transitionedfromasmallchainof7mobilephonestores in Ho Chi Minh City when we invested in 2007 into Vietnam’s first nationwide retailer of mobile devices andconsumer electronics, with 2,812 stores (1,009 thegioididong.com, 937 Dien may XANH, and 866 Bach hoa XANH stores) acrossall63provincesbyOctober2019.MobileWorldgrewfromnetprofitofVND6billiontoVND3,260billionbytheendofOctober2019.
MOBILE WORLD GROUP
42 43
PNJ: the largest jewelry retailer in Vietnam. Revenues grew fromoverVND110billionwith86storeswhenweinvestedin2007,toanetprofitofVND950billionacross324storesbythe end of 2018.
PHU NHUAN JEWELRY
GOLDEN GATE: the leading restaurant chain operator inVietnam.Grewfrom7restaurantsofonebrandconcept,Ashima Mushroom Hotpot, when we invested in 2008 to more than 300 restaurants across 22+brand concepts byDecember2019.
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MASAN CONSUMER: the market leader in the sauces and condiments segment of Vietnam’s packaged foods industry. Revenues grew from US$228 million when we invested in 2009 to over US$590 million in 2017.
VAS: a dual curriculum K-12 school chain, has transitioned from a network of small campuses into a system of 8 campuses in which 5 are mega campuses, comprising 8,500 students.VASalsotransitionedfromabilingualschoolbasedon Vietnamese curriculum with supplemental English classes intoadual-curriculumschoolofferingbothlocalVietnamesecurriculumand theCambridge InternationalCurriculum(inEnglish) to its students.
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TRAPHACO: shifted from the 5th largest pharma company in Vietnam in 2007 to the 2nd largest pharma company in Vietnam by aggressively growing its nationwide networkof company-owned distribution branches and rolling out adirect-to-pharmacy sales team, in which they sell directly to more than 23,000 pharmacies, equivalent to ~55% of total pharmacies in Vietnam. Traphaco grew from net profit of VND38billionin2007toVND260billionin2017,andfrom2branchesin2007to24branchesanddistributionsubsidiariesin 2017.
ICP: ICP was a fast-moving consumer company. Revenues grew from US$8.7 million when we invested in 2006 to over US$45 million in 2016. This investment was sold to an Indian company in 2011.
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AA CORPORATION: a furniture and interior contracting company and had 2 retail brandsNha Xinh and AA Décor during the time we held the investment. Revenues grew from US$9.3 million when we invested in 2003 to US$75(e) million in 2015.
FPT SOFTWARE: Vietnam’s largest and one of the fastest growing software outsourcing companies with revenue grew from US$52 million in 2010 when we invested to US$231.5 million in 2016.
Customers include:
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DISCLAIMER
Thisdocument(the“Brochure”)doesnotconstituteanoffer tosell (or thesolicitationofanoffertobuy)anysecuritiesorother financial instruments,nordoes itconstitutean offer to provide any investment management services. This Brochure is not intended toprovide the solebasisof anevaluationbypotential investorsofany investmentorinvestmentserviceandshouldnotbeconsideredarecommendationbyMekongCapitalAdvisorsCompanyLimited(“MekongCapital”)thatanyinvestmentorinvestmentservicementionedissuitableforeveryrecipientofacopyofthisBrochure.ProspectiveinvestorsinanyinvestmentfundconsultedbyMekongCapitaloranyotherMekongCapitalconsultingproducts, or persons wishing to engage Mekong Capital to provide any investment consulting service, should contact Chris Freund – Partner. Any such transaction or engagement will onlybeenteredintoincompliancewithapplicablelawsandonthebasisofappropriatelegaldocumentation.Inparticular,MekongCapitalisrequiredbyapplicablelawtocarryout certain procedures on, and to request specific information from, all potential investors or clients in order to verify their identity.
Some of the economic and financial market information in this Brochure (including certain forwardlookingstatementsandinformation)hasbeenobtainedfrompublishedsourcesand/orpreparedbyotherparties.Whilesuchinformationisbelievedtobereliableforthepurpose for which it is used in this Brochure, Mekong Capital, and its affiliates and their respective directors, officers, employees, partners and shareholders, do not assume any responsibilityfortheaccuracyofsuchinformation.CertaininformationinthisBrochureconstitutes“forwardlookingstatements”,whichcanbeidentifiedbytheuseofforwardlooking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “estimate”,“intend”, “continue”, or “believe”, their respective negatives and other comparableterminology.Due tovarious risksanduncertainties(including thosementionedbelow)actual events or results or the actual performance of any investment may differ materially from those reflected or contemplated in such forward looking statements.
When considering the prior performance information contained herein, prospectiveinvestors and clients should bear in mind that past performance is not necessarilyindicativeoffutureresultsandtherecanbenoguaranteeorassurancethatthefundsconsultedbyMekongCapitalwillachievecomparableresultstothosequotedinrelationtoprevious returns or to projected future returns. Prospective investors and clients should also note that market and macro-economic conditions and the prevailing regulatory and taxconstraintsaffectingMekongCapitalinthefuturemaydiffersubstantiallyfromthoseapplicabletothepreviousMekongCapitalfundsreferredtointhisBrochureandthatinthe future Mekong Capital may operate with different investment consulting and gearing strategies than those deployed in the funds referred to in this Brochure.
Ho Chi Minh City Office
(Main office in Vietnam)
Capital Place, 8th Floor
6 Thai Van Lung Street, District 1
Ho Chi Minh City, Vietnam
Tel: (84 28) 3827 3161
Hanoi Office
Lotte Hanoi Center, 31st Floor, East
Building, 54 Lieu Giai, Ba Dinh
District, Hanoi, Vietnam
Tel: (84 24) 3772 4888
E-mail: [email protected]
www.mekongcapital.com