From a pawnshop that accepts rice cookers to a “tycoon” of alternative finance in the billion-dollar market

Mr. Phung Anh Tuan, Chairman of F88 Trading Joint Stock Company.

Mekong Capital's journey to knock on the doors of 15 investment funds and record-breaking capital injection deals

Once considered a "freak" in the business world, Mr. Phung Anh Tuan, Chairman of F88 Business Joint Stock Company, started his business at a very young age, establishing his business while still a student in the technology field - an understandable path for a famous hacker since his student days.

Like many other startups, Mr. Tuan encountered many financial difficulties in the early stages of his business, and at times had to pawn his assets to pay his employees. It was during this process that Mr. Tuan realized the huge potential of the pawn market and officially “turned” into this sensitive business in 2013.

Right from the beginning of joining this sensitive playground, Mr. Tuan chose a different direction and a clear goal: building a chain; changing society's perspective on pawnshops in a healthy and transparent direction.

Therefore, at that time, when traditional pawn shops were often hidden in discreet alleys, with modest signs..., F88 chose the most prominent and visible locations (three-way and four-way intersections). That formula is still maintained by F88 today, after 12 years of establishment.

Mekong Capital has a record-breaking investment deal in F88.

In addition, while pawnshops at that time often had red or yellow signs and the counter staff were usually bald and tattooed bosses, F88 chose a cool blue brand logo, female receptionists, a civilized office, cool air conditioning... This approach gradually changed the way customers, the market and the management agency viewed the pawnshop model. At the same time, it also attracted the attention of investors.

Sharing with Dau Tu Newspaper , Mr. Phung Anh Tuan said that from the beginning, F88 was determined to follow the chain model and determined that when its own capital was used up, it would raise capital to expand its scale. However, after opening 30 transaction offices and running out of money, starting to raise capital, it was realized that the path to raising capital was extremely thorny, when social prejudice against this field was still heavy.

“The story of capital mobilization is an extremely arduous journey for F88, from raising shares to raising loans, because the company operates in a field with many prejudices. At that time, we approached 15 investment funds, but none of them were interested because they were afraid of risks. It was not until 2016 that we received investment capital from Mekong Capital. Mr. Chris Freund, CEO of Mekong Capital at that time, looked at this model in other countries, saw the potential of F88 and defended his point of view before Mekong Capital's Investment Council. This was also a record-breaking investment deal for Mekong Capital, the whole process took only 6 months,” Mr. Phung Anh Tuan recalled.

In fact, Mekong Capital's decision was completely correct when at that time, many pawn shop business models in Southeast Asia (Singapore, Thailand...) were all big winners, many pawn shop chains were valued at billions of USD.

For F88, Mekong Capital's investment is not only capital support, but also great assistance in developing the chain model (Mekong Capital has experience investing in Mobile World before), enhancing management capacity...

Immediately after successfully raising capital from Mekong Capital, F88 immediately announced its goal of becoming the number 1 pawn shop chain in Vietnam by 2021, owning 300 transaction offices, and valued at 300 million USD.

After the first foreign capital call deal in 2016, F88 continued to successfully call for capital from Granite Oak Fund (2018 and 2020), Vietnam - Oman Fund and MEF IV Fund (2023).

In particular, with its growing reputation, in 2019, F88 successfully issued its first bond. Since then, private bonds have become one of the company's popular capital mobilization channels. Most of the issued bonds were sold out just a few days after issuance.

In 2025, F88 will be officially listed on the UpCOM exchange, marking the company's completion in diversifying capital mobilization channels: from credit to bonds and stocks. At the same time, it also shows the company's commitment to transparency and reputation.

In fact, F88 is not only a pawn service chain, but has become the leading alternative financial service chain in Vietnam. Accordingly, the company deploys a variety of products including pawn loans, insurance, and banking agents.

As for pawn lending services, instead of accepting pawn from rice cookers to cars, motorbikes, jewelry, handbags... as when it was first established, after learning from Thailand's experience, starting in 2018, F88 only deployed pawn lending products using vehicle registration (cars, motorbikes) and has maintained them until now. This is a loan product that is easy to control risks, easy to operate, and highly effective.

In 2024, F88 will establish an insurance company, targeting low-income customers (insurance products are worth only 200,000 VND, but are very practical and meaningful to customers). On average, since its establishment, F88 has sold 94,000 insurance products/month. Currently, 70% of the company's revenue comes from the pawn lending segment and 30% from the insurance sector. In the coming time, the company's revenue will increase further thanks to the banking agency segment.

Huge potential from the $8 billion market

Currently, F88 has nearly 900 transaction offices nationwide, disbursing a cumulative amount of more than VND 50,000 billion to about 2.5 million customers. Thus, F88's outstanding loans are equivalent to the credit scale of small banks in the system, while the network even surpasses many private banks.

Mr. Phung Anh Tuan, Chairman of F88: F88's listing helps investors and customers see F88 from a different perspective: more transparent, a model that is valuable to society.

F88 is aiming to reach 1,000 transaction offices by 2026, be valued at 1 billion USD and move towards listing on HoSE in early 2027. From now until 2030, F88 aims to have 2,000 transaction offices, with revenue increasing by 20% per year. In the period 2019-2024, the company achieved a compound growth rate (CAGR) with revenue increasing by 67% and outstanding loans increasing by 61% per year.

Mr. Phung Anh Tuan, Chairman of F88 Board of Directors :
We submitted our listing application and encountered a problem in 2023 and it took a long time to explain before it was approved by the State Securities Commission. F88's approval to list on the stock exchange has established a new financial industry in Vietnam: alternative finance. Not only proving the approval of the management agency, this event also helps investors and customers see F88 from a different perspective: more transparent, a model that is valuable to society.

Sharing with Dau Tu Newspaper about the capital mobilization strategy in the coming time, Mr. Phung Anh Tuan said that the company will have an important capital calling round before changing floors.

“In the near future, F88 will have a pre-IPO round, taking place around the beginning of next year. We will choose strategic investors who not only have capital potential but also share the same goals, have contributed reputation and management experience to F88,” Mr. Tuan shared.

Currently, F88's shareholder structure has a large contribution from foreign investors with an ownership ratio of 57.5%. In which, Mekong Capital through two legal entities Skydom and Winter Flame is the largest shareholder, holding a total of nearly 37% of capital. Other international investors such as Granite Oak and Oman Investment Authority are also holding nearly 18% of capital.

F88 is pursuing a strategy of diversifying capital mobilization channels, including loans from international financial institutions, bond issuance, domestic bank loans and equity mobilization through the stock exchange. The company's goal is to maintain a debt-to-equity ratio (D/E) below 4 times to ensure financial security.

Mr. Tuan said that capital raised from upcoming stock issuances, including the pre-IPO round, will be prioritized for investment in three main areas: technology, expanding the network of transaction offices, and diversifying and developing new products.

According to analysts, the potential of the alternative financial market in Vietnam in general and the pawn lending market in Vietnam is still very large. In Thailand, although the credit access rate is over 90%, pawn chains are still growing very strongly, the 3 largest pawn chains in Thailand alone have more than 15,500 transaction offices, the capitalization value of each large pawn business is up to billions of USD.

Meanwhile, the credit access rate in Vietnam is much lower, especially for disadvantaged groups who have almost no chance of accessing bank credit. The emergence of alternative financial models in Vietnam (P2P lending, pawning, online lending, buy now pay later...) has partly filled this gap, but there is still a lot of room. According to FiinGroup statistics, the revenue of registered pawnshops operating nationwide in 2024 will reach about 8 billion USD. Outstanding loans of new generation pawnshops account for only 3.2% of the total outstanding loans of the pawnshop market, in which F88 is considered to have no competitors in this market.

Currently, F88 applies a multi-channel distribution strategy: Transaction office network, digital channel and partner channel. On the digital channel, the My F88 application deployed by the company is the first financial application on the market for ordinary customers, used by hundreds of thousands of customers after a few months of go-live.

Despite accelerating technology adoption, the network of transaction offices is still considered the “backbone”, both a “touch point” with customers, helping to increase brand awareness, and supporting two other channels: digital channel and partner channel.

F88's smart operating system.

To effectively manage thousands of transaction offices, F88 has invested in an intelligent operating system, monitoring the operational efficiency of each transaction office right from the headquarters. Business data is digitized, the risk management system is intelligently programmed. In the lending process, the company has long applied credit scoring systems, machine learning and AI to evaluate customers, helping the company make fully automatic lending decisions, over 90% of applications are disbursed within 15 minutes.

Effective management is also the reason why F88 has a very good break-even point. Currently, on average, each F88 store has a break-even point of 12 months. By the end of 2025, it is expected that 100% of transaction offices will be profitable.

Unlike other fintechs in the market that often “burn money” to attract users and then expand financial products, F88 focused on building the foundation in the first 8 years, promoting core business activities, risk management, and only now is it promoting technology development and digital applications to expand customers. This strategy gives the company a solid foundation to accelerate.

Source: https://baodautu.vn/tu-tiem-cam-do-nhan-ca-noi-com-dien-den-ong-trum-tai-chinh-thay-the-tren-thi-truong-ty-usd-d372238.html