Mekong Capital invests in Vietnam-based pawn shop chain F88

Private equity firm Mekong Capital has invested an undisclosed amount into Vietnam-based pawn shop chain F88, marking the third investment by its $112.5 million fourth fund.

The terms of the investment were not disclosed, although the company disclosed that Chris Freund, partner at Mekong Capital, joined the management board of F88 as part of the deal.

Typically, the Vietnam-focused PE firm does an average funding round of between $6-15 million from its Mekong Enterprise Fund III.

Founded in 2013, F88 is Vietnam’s first pawn service chain, leveraged by a tech platform. The transparency in operation, boosted by technology, offers an effective alternative to traditional borrowings, and brings a reliable financial solution to consumer, said the company.

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, 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,” he commented on the investment.

The chain aims 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. It currently operates 15 stores in Hanoi and several surrounding provinces.

“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, partner at Mekong Capital.

This is an established business model 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 said 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, regardless of the sectors.

With the investment by Mekong Capital, F88 hopes to go for an IPO within the next five years.

Prior to the financing into the prawn shop operator, Mekong Enterprise Fund III had closed investments in restaurant chain Wrap & Roll and logistics company ABA Corporation.

Also read:

Mekong Capital invests $6.9m in Vietnamese restaurant chain Wrap & Roll

Vietnam: Mekong Capital invests in logistics firm ABA Corp from new fund

Vietnam’s Mekong Capital hits final close of fourth fund at $112m, fails to meet $150m target