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Stepping up

Released at: 04:46, 02/07/2014

Stepping up

Having reached a long-term personal goal of working in private equity, Mr Chad Ovel is determined to show Mekong Capital that appointing him as a Partner was the right choice.

by Hai Bang

As soon as the US lifted its trade embargo on Vietnam in 1994 a number of investors headed to the Southeast Asian country in search of opportunities. Among the trailblazers was a young man named Chad Ovel, who upon graduation in 1996 made the decision to move to Asia and chose Vietnam as his preferred destination. His early days in the country were spent in the investment field, with venture capital fund Pacifica Vietnam and the World Wide Fund for Nature Indochina.

In July last year Mr Ovel, who now possesses 17 years of experience leading value growth in Vietnam, became a Partner at Mekong Capital, which reveals a lot about its strategy of moving forward. As he is the first new partner since Mekong Capital was established in 2001 by founder and current Managing Partner Chris Freund, the Vietnam-focused private equity firm has now made a transition to a partnership culture, under which it can be even more effective at adding value to its investee companies.

Right person

While making Mr Ovel a partner makes strategic sense it can also be viewed as a safe bet by Mekong Capital. His first job out of college was working for a venture capital fund and, later on, during his time as Managing Director of ScanCom Vietnam, he worked to raise capital for the company from private equity funds. “Each time I attempted to raise equity I thoroughly enjoyed the transaction process and was very interested in the fund manager role in the process,” he told VET. For this reason he then decided to pursue an MBA at the University of Chicago; famous for its focus on private equity and financial management. “My time at the University of Chicago cemented my interest in the profession and I then set a goal for myself to eventually work at a private equity fund,” said Mr Ovel, who speaks Vietnamese fluently.

His wish finally came true when he was offered the opportunity to join Mekong Capital at the partner level. “We are delighted that Chad has joined our firm,” said Mr Freund. “We worked closely with him while he was at AA Corporation and were so impressed by his leadership and his tremendous impact on the success of the company.” Feeling humbled by the opportunity, Mr Ovel is nonetheless confident that he can contribute significantly to Mekong Capital and its investee companies by sharing what he has learned over the years working as General Director at two large companies in Vietnam.

Before joining Mekong Capital, Mr Ovel, who was born and bred in the Midwest, made his name at ScanCom, where he led the company’s aggressive and innovative growth in turnover from $15 million to $150 million, making it the largest furniture exporter in Vietnam in 2006. He then spent nearly six years at AA Corporation, which has three main businesses lines: interior construction, furniture manufacturing, and home furnishing retail. Here he learned how to balance his time across three distinctly different business operations while harvesting the synergies between them. This is particularly useful, as the process is not at all dissimilar to managing a portfolio of diverse companies with a private equity firm. The greatest difference between being a CEO and a partner of a private equity firm, Mr Ovel believes, is evolving from running the day-to-day operations of a business to supporting the CEO and ensuring value growth for shareholders from a Board of Directors level. “As a CEO I had many daily issues to address, while now my role at Mekong Capital is much more focused on long-term strategic planning and execution,” he said.

Pushing ahead

Most agree that Mr Ovel’s background in investment makes him a safe pair of hands to take Mekong Capital forward. And after nearly a year in the position he has virtually mastered the industry and is very excited to begin pursuing new investments. He and Mekong Capital will, no doubt, feel encouraged by the current market situation. Many strong opportunities for private equity exist in the market at this time as Vietnam’s private sector has matured considerably since Mekong Capital started investing in 2002. “Companies have grown in size, created deeper management talent, and have experienced the importance of focusing on their core business,” he said. “Furthermore, the market has had significant exposure to private equity transactions and so understands our needs and expectations as shareholders.”

But this does not necessarily mean that everything is rosy for private equity funds. Among the challenges they face today, Mr Ovel sees two as being the most critical. The first is the lack of competent professional managers who understand and can implement global best practices. The other is the persistent corruption in the country, which he thinks has a lot of hidden consequences for the economy, such as the poor performance of the State-owned sector.

Mr Ovel’s responsibilities are quite straightforward, as the investee companies he is now in charge of are among the fastest growing in the portfolio, with Nam Long, Asia Chemical and Golden Gate recording good results last year. His personal approach is to work directly with each company’s CEO to jointly determine key priorities for the coming year and define exactly how Mekong Capital can provide support to achieve those priorities. “Our main goal is to add a lot of value in all of our investee companies, normally through working with them on strategy, building the management team, and finding ways to introduce best practices in their industries,” he said. “We also aim to sell a few investments and launch our next fund.”

Last year Mekong Capital’s success was based on being able to return capital by exiting from three of its investments and partially exiting from a fourth. One of those exits is now considered a benchmark exit in the region, because of the high multiple on the invested capital obtained. While Mekong Capital hopes that he will bring strong operating expertise to play a major role in leading the firm, the appearance of Mr Ovel won’t change its investment approach, which greatly emphasises the role of the management team at investee companies. “We will put our focus on the company that has the best management team as our most potential partner, regardless of their position or rank in the sector at the time of our investment,” he said. “Great management teams are the key defining factor of success, based on our experience of having completed 26 investments in Vietnam since 2003.”

Having lived and worked in Vietnam since 1996 Mr Ovel believes that there are many drivers that combine to define one’s success. These factors include a mix of a loving family, daring to dream and setting major personal goals, and, lastly, being willing to step out from one’s comfort zone and take risks to achieve goals. One thing that many may not know about Mr Ovel is that he is an ambitious high-altitude mountaineer, who has already reached the summit of the 8,050-metre Broad Peak in Pakistan and the 6,830-metre Ama Dablam in Nepal. Interestingly, he sees similarities between mountain climbing and building a business. “To reach the top of an 8,000 metre peak the expedition can take up to ten weeks and the pain and setbacks along the way are often unexpected and difficult to foresee,” he explained. But at all times, managing risk is paramount to survival. “Growing a business in a challenging environment such as Vietnam is no different,” he went on. “Persistence in the face of uncertain challenges and always keeping an eye on managing risk are critical in growing a business in the long run.”

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