Why is Shark Thuy in trouble?

Delisting, board members flee.

Apax Holdings Investment Joint Stock Company (IBC), chaired by Mr. Nguyen Ngoc Thuy (Shark Thuy), has just announced unusual information regarding the receipt of resignation letters from the Board of Directors of Mr. Quach Manh Hao, Mr. Nguyen Minh Chinh, and Mr. Nguyen Trong Quynh.

Mr. Quach Manh Hao was a familiar name in the Vietnamese stock market in the past. Mr. Hao joined the Board of Directors of Apax Holding in mid-2017 but lived in the UK; teaching and researching at Lincoln University.

Mr. Hao had previously sold most of his IBC shares to take profits, a large portion of which was sold when the stock was around its historical peak in 2021. He currently holds 110,000 shares, representing 0.13%.

With three members of the Board of Directors resigning, Apax Holdings now has only two members: Mr. Nguyen Ngoc Khanh and Chairman Nguyen Ngoc Thuy (Shark Thuy).

Board members are fleeing Apax Holdings amid the Ho Chi Minh City Stock Exchange (HOSE) announcement on November 22nd of the mandatory delisting of IBC shares of Apax Holdings Investment Joint Stock Company.

IBC is under three violation monitoring categories, including a warning for not holding its annual general shareholders' meeting more than six months after the end of the fiscal year; control due to the delay in submitting the audited semi-annual financial report for 2023 by more than 30 days compared to the regulations; and trading suspension due to continued violations of regulations on information disclosure in the securities market after being placed under trading restrictions.

To date, Apax Holdings has not published its audited financial statements for 2022, its financial statements for the first and second quarters of 2023, its reviewed semi-annual financial statements for 2023, its management report for the first six months of 2023, and has not held its 2023 annual general meeting of shareholders.

According to HOSE, since the suspension of trading, the company's information disclosure violations have not been rectified, are likely to continue and persist, seriously violating information disclosure obligations and affecting the rights of shareholders.

Apax Holdings is the owner of what was once the largest English language chain in Vietnam: Apax English Joint Stock Company (Apax English/Apax Leaders). IBC is a subsidiary of Egroup Education Group Joint Stock Company. By the end of 2022, Shark Thủy owned 6.17% of IBC's capital, while Egroup held nearly 16.8% of IBC.

Rapid growth in the education sector, bogged down by real estate.

Shark Thủy's Apax Holdings experienced a period of rapid growth. Seeing the opportunity in the multi-billion dollar education sector, Shark Thủy expanded his network of English language training centers at an extremely fast pace, becoming the largest English language chain in Vietnam. Revenue surpassed 1 trillion VND in 2018 and doubled to 2 trillion VND shortly thereafter.

Apax English/Apax Leaders centers have sprung up in many provinces and cities across the country. According to the website, this system has over 120 centers nationwide under the Apax Leaders brand, spread across more than 30 provinces and cities with approximately 120,000 students enrolled.

However, the Covid-2019 pandemic has caused many difficulties for educational centers.

Shark Thủy's Apax Holdings faces further challenges as it ventures into real estate. The sluggish and almost frozen real estate market since 2022 has pushed many businesses into a state of illiquidity.

Over the past year, Shark Thủy's company has been restructuring, using both real estate and household goods to settle debts for investors. However, Apax Holdings still hasn't escaped its difficulties. IBC shares have fallen below rock bottom, less than 2,000 VND/share, a more than tenfold decrease in just over a year, and trading has been suspended since September 18th.

Despite Apax Holdings facing difficulties and its share price plummeting to rock-bottom levels, Shark Thủy plans to list Apax Leaders on the stock exchange. Recently, Mr. Thủy affirmed that Apax Leaders will definitely restore its business operations in Ho Chi Minh City.

Accordingly, the Apax English center chain is still considered a bright spot thanks to its restructuring efforts. Egroup aims to optimize business operations to generate profits. From there, it can implement its plan to attract major investment funds, list Apax Leaders on the stock exchange in the future, and ensure debt repayment obligations to investors.

Apax English is a rapidly growing English language center system in Vietnam. Mr. Nguyen Ngoc Thuy had ambitions to expand the business significantly, but faced many difficulties due to poor management.

In a live interview at VietNamNet , Mr. Nguyen Ngoc Thuy himself admitted that Apax English had grown too rapidly. From mid-2019, he planned to reduce borrowing costs, restructure from debt financing to equity raising, and contact investment funds to raise capital in 2020. However, the Covid-19 pandemic occurred, and that plan was also altered.

Mr. Thuy stated that, while on a winning streak, the company moved quite rapidly but encountered a significant setback in 2019. This was also the period when Egroup opened the most English language centers, operating for a very short time before having to close them. At one point, the company suffered losses of nearly 1,000 billion VND in six months. Interest expenses and financial costs made the business "extremely difficult."

In business, the line between breakthrough and crisis is quite thin. Risks are becoming increasingly greater as the world becomes more uncertain. Geopolitical upheavals, natural disasters, policy changes... can happen very quickly and can cause many businesses with great potential to go bankrupt. Even organizations considered "too big to fail" struggle to avoid bankruptcy after just a few wrong decisions.

Shark Thủy is running out of steam because of education, borrowing nearly a trillion VND to invest in real estate.

With plans to attract trillions of dong and invest in the new real estate sector, this is a bold business expansion plan by Shark Thủy after a year in which his education-focused business faced difficulties due to the Covid-19 pandemic.

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