Recently, the Criminal Police Department of the Ministry of Public Security coordinated with the Ho Chi Minh City Police to urgently search the headquarters of F88 Trading Joint Stock Company and many other branches in Ho Chi Minh City to investigate the act of Extortion of property. The incident caused a stir in public opinion because F88 is a large pawn shop chain, operating for a long time in Vietnam.
The search involved an F88 employee.
According to the response from F88 Trading Joint Stock Company, at 10:00 a.m. on March 6, 2023, the F88 office at Ho Chi Minh City Branch recorded the incident of the authorities coming to the headquarters to work. The company said that the authorities are working to collect information to serve the investigation related to F88's personnel.
After receiving the above information, the company's Board of Directors directed relevant departments to coordinate with authorities to provide information to investigate and clarify the incident.
F88 responds to the incident of the company headquarters and many branches being urgently searched by the police (Photo TL)
Regarding information surrounding F88's business activities, the company said that F88 operates in the field of lending by mortgaging assets licensed in accordance with the law. The company is still closely monitoring and coordinating with the authorities to provide information to investigate and clarify the incident.
How is F88 raising capital for its business?
F88 pawn shop chain was founded in 2013 by Mr. Phung Anh Tuan (nickname Tuan Pat), born in 1984, who was famous in the national technology community as a famous hacker. Mr. Tuan was also the director of a cybersecurity company.
Operating in the relatively sensitive financial sector of pawnshops, F88 has now expanded to more than 830 stores nationwide. This unit has successfully raised capital in two rounds with Serie A from Mekong Enterprise Fund III and Serie B from Granite Oak Fund in the period from 2017-2018.
In 2022, F88 will raise another $70 million in investment from financial funds including CLSA Capital Partners (Hong Kong) Limited (Lending Ark) and Lendable Group (UK). Most recently, F88 has also completed its Series C funding round with $50 million from two investors, Vietnam - Oman Fund (VOI) and Mekong Enterprise Fund IV (MEF IV).
In addition to capital raising activities, to maintain a stable cash flow for pawn business operations, F88 has also continuously mobilized bond capital with a total of 32 bond issuances implemented from 2019 to present with interest rates ranging from 9-12%/year. These are all fixed-interest bonds, paid periodically at the end of the term and can be redeemed before maturity. The total amount of bonds in circulation is up to more than 1,000 billion VND.
How is F88 doing business?
Pawn business is considered one of the relatively "sensitive" business sectors in Vietnam. CEO Phung Anh Tuan himself once shared that the target audience of F88 is those who are unable or have difficulty accessing credit capital from banks and financial institutions. Loans for this customer segment are often small loans, with urgent and fast borrowing needs.
According to the most recent business results report ever published by F88 in 2020, F88 has equity of about 434 billion VND, liabilities of 1,000 billion VND, mainly bond debt of 842 billion VND. Profit earned in 2020 reached 45 billion VND, an increase of 170% compared to the previous year.
In F88's business activities, according to a report from Mirae Asset Securities Company, this company operates in two main areas: asset mortgage and insurance agency. According to data up to the end of 2020, the average value of an asset mortgage contract at F88 is 13 million VND, the loan interest rate is 13.2%/year excluding storage costs and asset appraisal costs.
Revenue from F88's pawn business mainly comes from motorbike pawning, accounting for 115.6 billion VND, car pawning accounts for 38.6 billion VND, and other assets pawning accounts for 13.4 billion VND. The fact that motorbike pawning revenue accounts for a high proportion, up to more than 69% of the revenue, clearly reflects the target customer segment that F88 is targeting.
In 2021, the company's return on equity (ROE) was recorded at 18%. F88's bad debt ratio was announced at 1.2%, which is relatively low compared to 9% at other financial companies. F88's total gross write-off costs/average outstanding debt in 2021 were recorded at 11.4%.
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