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Vietnam's Mekong Capital avoids pandemic impact; PE expected to pounce on pharma

S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

Many managers were forced to master the art of private equity operations in a virtual world throughout 2020, but Vietnam-headquartered private equity firm Mekong Capital saw a return to normal after a six-week national lockdown. After six weeks, the government moved to a targeted restriction approach, while maintaining mask and social distancing requirements.

As a result, Vietnam has one of the lowest infection rates in the world. Chris Freund, founding partner of Mekong, told S&P Global Market Intelligence that he characterized pandemic times as business as usual, working onsite with portfolio companies and meeting people in person, an enviable position for many in the asset class.

Although Vietnam is currently experiencing its largest outbreak of COVID-19 yet, Freund said Mekong's team is still working from its office in Ho Chi Minh City. He added that "Hanoi's a different story, under more of a kind of a quasi-lockdown. It's all location-specific."

Freund is optimistic about the domestic business environment, adding that the firm has ample dry powder, which some limited partners are anxious to see deployed. Mekong has made some investments this year, and the intention is to do more deals across 2021, he said.

"If you invest in a company that's not growing revenues, then you really screwed up on your pre-investment [due diligence], because there are so many companies that are growing here, they're not hard to find."

Read more about how Mekong Capital has operated during the pandemic in the first of a series of articles looking at how emerging market private equity firms fared during the COVID-19 outbreak.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

CHART OF THE WEEK: PE M&A push expected in pharma

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In terms of disclosed deals, private equity and venture capital firms deployed about $4.9 billion globally into the pharmaceuticals sector in the year to May 31, according to S&P Global Market Intelligence data.

Private equity and venture capital deal values in the pharmaceutical sector increased at an 11.7% CAGR from 2010 to 2020, said Cameron Joyce, vice president of Preqin's Research Insights.

Private equity and venture capital investment in pharmaceuticals is expected to accelerate as the sector "embarks on fundamental change" with digital and analytical tools becoming more substantial as supply chains are disrupted, Joyce said.

FUNDRAISING AND DEALS

* Funds managed by The Blackstone Group Inc., The Carlyle Group Inc. and Hellman & Friedman LLC will make a majority investment in medical supply company Medline Industries Inc., along with Singaporean sovereign wealth fund GIC Pte. Ltd.

* CVC Capital Partners Ltd. is in discussions to buy a 15% stake in a new entity that would oversee the media and data rights for the Association of Tennis Professionals and the Women's Tennis Association for $600 million, according to London's Financial Times, citing people familiar with the proposal.

The buyout firm is also nearing a deal to purchase British holiday parks operator Away Resorts Ltd. from Freshstream Investment Partners LLP for £250 million, Sky News reported.

* Funds managed by Apollo Global Management Inc. affiliates acquired a majority stake in Total Operations and Production Services LLC, which offers contract gas compression services for the Permian Basin, from Black Bay Energy Capital LLC.

ELSEWHERE IN THE INDUSTRY

* Primavera Capital Group is purchasing Reckitt Benckiser Group PLC's infant formula and child nutrition business in China for an implied enterprise value of $2.2 billion.

* An investor group including Mercury Capital Pty. Ltd.-managed funds will sell Australian mobile messaging solutions provider Message4u Pty. Ltd., doing business as MessageMedia, to Swedish cloud communications company Sinch AB (publ) at an enterprise value of US$1.3 billion.

* Onex Corp., together with the management of Monroe Operations LLC, or Newport Healthcare, agreed to buy the mental healthcare facilities operator.

* Shamrock Capital Advisors LLC exceeded the $1 billion hard cap for its Shamrock Capital Growth Fund V LP at final close.

FOCUS ON: AEROSPACE AND DEFENSE

* KKR & Co. Inc. is purchasing Atlantic Aviation Corp. from Macquarie Infrastructure Corp. for close to $4.48 billion in cash and assumed debt and reorganization obligations in a deal expected to be completed in the fourth quarter.

* Private jet operator Vista Global Holding Ltd., which is backed by Rhone Capital LLC, is exploring a potential merger with a special purpose acquisition company at a valuation of over $10 billion including debt, Bloomberg News reported, citing people familiar with the matter.

* Angeles Equity Partners LLC added Primus Metals Inc., or Primus Aerospace, which makes complex precision components for the aerospace, defense and space markets, to its portfolio.