A group of investors, including large development institutions, has launched the Mekong region’s first venture capital fund, which will aim to help small- and medium-sized businesses.
The $16 million Mekong Enterprise Fund, whose investors include the Asian Development Bank, the Nordic Development Fund, Switzerland, Finland and private businessmen, will focus on businesses dealing with export industries and local services, according to a statement by Mekong Capital, Ltd, the company established to manage the fund.
Investments will be targeted toward companies in Cambodia, Laos and Vietnam.
Mekong Capital will be advised in its investments by the Mekong Project Development Facility. The MPDF has already identified six potential businesses in Cambodia, but several months of preparation are still necessary before any investments are made, said MPDF regional manager Adam Sack.
MPDF will provide technical assistance, including lessons on management and quality assurance.
Potential investments will be in “any export-oriented business such as agricultural processing or garments,” Chris Freund, managing director of Mekong Capital, wrote in an e-mail. “Tourism-related services are also a possibility, but hotels are not.
“The appraisal is a detailed process that usually takes four to six weeks and a series of three to six meetings. When evaluating companies in Cambodia we will try to shorten the number of meetings required and do what we can via e-mail or the telephone,” he wrote.
Once the first $16 million is invested, Mekong Capital will try to raise additional funds, Freund wrote. “The Fund’s life is expected to be 10 years, but it can only make new investments within the first five years,” he wrote. “When the Fund makes an investment, it expects to hold the investment for an average of five years, but it could be longer or shorter depending on the circumstances.”
Investments will be made with the advice of both MPDF and Mekong Capital members, “who have significant experience in investment management and banking,” Freund wrote.
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