Private equity firm Mekong Capital announced on January 10 that the Mekong Enterprise Fund III (MEF III) has invested an undisclosed amount into Vietnam-based pawn shop chain F88.
The terms and value of the investment were not disclosed, although the fund is said to be an eight digit number and Chris Freund, a partner at Mekong Capital, will join the management board of F88 as part of the deal.
This also marks the third investment made by the PE firm’s US$112.5 million fourth fund since its launch in May 2015. Prior to this financing, MEF III had closed investments in restaurant chain Wrap & Roll and cold chain logistics company ABA Corporation.
Founded in 2013, F88 is a pioneer in Vietnam’s pawn service chain which leverages on a tech platform. It provides transparency in operation and offers an effective alternative to traditional borrowings which brings a reliable financial solution to consumers.
The IT platform within F88 covers data about management tasks, deposited items, and most importantly product valuation. “For this model to work, it is very difficult to agree on the valuation of the products. Our technology solutions are the key to this problem,” said Phung Anh Tuan, the chairman and CEO of F88.
“This combination facilitates us to strengthen our management team, approach to the world’s best practices and improve service quality to ready us for a rapid and sustainable growth,” Phung Anh Tuan added.
F88 currently operates 15 stores in Hanoi and several surrounding provinces while aiming to have 70 outlets in the north of Vietnam by the end of this year and as many as 300 stores across the country by 2020.
“F88’s competitive edge is its entrepreneurial co-founders, professional management team, IT infrastructure, and strong corporate governance. We believe that with Mekong Capital’s well-proven approach towards adding value, called Vision Driven Investing, and our extensive network of international experts and resources, F88 will continue to improve their operations and successfully execute an ambitious nationwide expansion plan,” said Freund, the Mekong Capital partner at F88.
This is said to be an established business model found around the world, according to the fund partner. However, the risk associated with it in the Vietnamese market is how to scale the size of the market opportunities.
Freund also mentioned that the firm’s strategy did not include investing in new disruptive technologies. However, Mekong Capital will continue to search for companies with proven business and strong teams that can successfully execute their models, irrespective of sectors.
The chain currently provides loans on diverse assets such as cars, motorcycles, mobile phones, laptops, and jewellery. With the investment by Mekong Capital, F88 plans to go for an IPO within the next five years.
“We are very proud and excited that F88 is the third investment we’ve announced for the Mekong Enterprise Fund III,” Freund added.
MEF III, which focuses on investments in Vietnamese consumer-driven businesses such as retail, restaurants, consumer products, and consumer services, targeting investments ranging from US$6 to US$15 million each.
By Vivian Foo, Unicorn Media