Mekong Capital, one of Vietnam’s best-known private equity firms, will seek at least $150 million for its debut impact strategy, affiliate title Private Equity International understands.
The Mekong Earth and Forest Fund (MEFF) will have a $200 million hard-cap, according to a source with knowledge of the matter.
Mekong Capital declined to comment on fundraising.
Ho Chi Minh-headquartered Mekong’s existing private equity funds target minority investments and buyouts in Vietnam’s consumer sector. The firm’s most recent fund, Mekong Enterprise Fund IV, closed on $246 million in 2021, PEI reported at the time.
MEFF will target companies that help mitigate climate change through the regeneration of forests and soil in the lower Mekong region, according to a November statement from the Dutch Fund for Climate and Development. The fund is intended to boost soil health, promote biodiversity and protect surrounding water bodies that will improve the climate resilience of vulnerable communities in Vietnam, Laos, Cambodia and Thailand.
The SNV Netherlands Development Organisation in November agreed to sign a €303,750 grant funding agreement with Mekong Capital to support the firm in building knowledge and finalizing MEFF’s investment strategy, the statement noted. This will include considerations such as its ESG policy, carbon credit strategy and financing structures.
Mekong Capital plans to set “ambitious goals” for MEFF, according to an SNV disclosure. These may include seeking to achieve 100,000 hectares of regenerated land, 10 million tons of CO2eq captured, 20,000 new directly created jobs for people in the region and 10 successful investment cases to inspire further private investment across the region.
Impact-focused investors increasingly see the potential for positive environmental and social outcomes through agri investments, affiliate title New Private Markets reported in April. The Intergovernmental Panel on Climate Change stated in 2019 that around 23 percent of emissions come from agriculture, forestry and other land use. These emissions come from multiple sources, including deforestation to allow farming to take place. Agriculture is particularly associated with emissions of methane – a gas that has 84 times the global warming potential of carbon dioxide over a 20-year timeframe.
Impact investing strategies disproportionately favor developed markets. When asked about their core geographic focus for their impact investment program, 60 percent of LPs mentioned North America and 45 percent noted Europe, according to Rede Partners’ sustainability report in March. Only 15 percent view Asia-Pacific as a core focus.