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Mekong Capital to divest from PNJ

Released at: 07:38, 30/06/2016

Mekong Capital to divest from PNJ

Photo: Duc Anh

6.57% holding to be sold via negotiation during July.

by Hung Nguyen

The Vietnam Azalea Fund (VAF), managed by Mekong Capital, will divest nearly half of its stake in the Ho Chi Minh City-headquartered Phu Nhuan Jewelry Joint Stock Company (PNJ) via negotiations, the fund manager announced on June 29.

Ms. Le Bao Ngoc, Corporate Communications Manager at Mekong Capital, said that VAF would reduce its PNJ holding to 3.5 million from the current 6.5 million. “The negotiation-based deal will happen during July,” Ms. Ngoc told VET but did not elaborate on the internal rate of return (IRR).

VAF’s 6.5 million shares represent 6.57 per cent of PNJ’s charter capital and the deal, once done, would see Mekong Capital leave PNJ’s Board of Directors.

PNJ is listed on HSX and its price is around VND80,000 ($3.58). VAF invested in PNJ in January 2008 with an amount of $12 million.

The closed-ended VAF was launched in June 2007 with $64 million in capital. The fund’s divestment from PNJ is one of its last before closing as planned in 2017, according to Ms. Ngoc.

PNJ is a jewelry manufacturer and the largest jewelry retailer in Vietnam, with well-established brand names PNJ Silver, PNJ Gold, CAO FINE Jewelry, and Jemma. Its distribution and retail network included 20 branches, 193 retail stores and more than 3,000 wholesalers throughout Vietnam as at November 30, 2015.

In the first quarter of 2016 it recorded total revenues of VND2.35 trillion ($105.3 million), an increase of 12 per cent year-on-year and representing 27 per cent of the annual plan. Pre-tax profit was VND234 billion ($10.04 million), an increase of 64 per cent year-on-year, and after-tax profit was VND120 billion ($5.37 million), an increase of 9 per cent year-on year. Total assets stood at VND3.02 trillion ($135.32 million), 1.74 per cent higher than on December 31, 2015.

In May it divested its 1 per cent holding in Vietnam’s IT giant FPT with an IRR at that time of 1.8. In the same month it attempted to fully exit from the Nam Long Group (NLG), a leading property developer in Ho Chi Minh City, putting its 6.4 million shares, or 4.45 per cent stake, up for sale.

It only sold 4 million shares, however. In early June it continued to sell the remaining 2.4 million shares with an expected transaction time from June 15 to July 14.

VAF’s portfolio now includes NLG, PNJ and the Trafaco Joint Stock Company - one of Vietnam’s major pharmaceutical companies.

On June 27 Mekong Capital unveiled a plan to divest from Mobile World Investment Corporation (MWG) by selling 2.5 million shares. The transaction timeframe is from June 29 to July 28 via put through trading. Once the deal is done it will cut Mekong Capital’s holding from 10.94 per cent to 9.24 per cent.

Established in 2001, Mekong Capital has completed 29 private equity investments, of which 17 have been fully exited and three have been partially exited. It has managed three funds, including the $50 million Mekong Enterprise Fund II, the $64 million Vietnam Azalea Fund, and the $87.4 million Mekong Enterprise Fund III.

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