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Prior to the transaction, the fund was holding a 14.9 per cent stake in Golden Gate, of which it is still holding 11.6 per cent.
This divestment results in a gross return multiple of 3.6 and a gross IRR of approximately 72.2 per cent on the shares sold by the fund. The new investor’s investment in Golden Gate is a combination of newly issued shares as well as secondary shares, with the capital deployed in two phases.
“We are delighted with the performance of Golden Gate, which has grown from around 5 restaurants the time we invested in April 2008 to around 30 presently. We remain very excited about the long term future of the company, but as a lot of value had been created in a short period, we saw this as an opportunity to realise some of our profits while maintaining a stake in the company,” said Chris Freund, the managing partner of Mekong Capital.
Mekong Enterprise Fund II (MEF II) completed its forth divestment from Mai Son Joint Stock Company in June this year, two years after pouring $5 million in this luxury fashion retailer in Vietnam, forming its first exit deal this year.
The $50 million MEF II is going to sell one or two investments this year due to good opportunities, but most of that fund’s investments will be held for two to six years.
Golden Gate originally established itself as the pioneer and the top mushroom hotpot restaurant company in Vietnam under the Ashima brand. Currently Golden Gate operates six Ashima restaurants in Ho Chi Minh City and Hanoi.
In 2009, the company launched a new product concept - conveyor hotpot express restaurant named Kichi Kichi - to address casual dining market segment. By October 2010, Golden Gate had scaled up the Kichi Kichi restaurant concept to 22 outlets in Hanoi, Ho Chi Minh City and Singapore.
Realising the tremendous opportunity in the Vietnam’s restaurant market, the company is expanding into other restaurant concepts and it aims to have 50 company-owned restaurants in operation by the end of 2011.