How owner ran English center chain Apax Leaders into ground before his arrest

Thuy, 41, was taken in on Monday for alleged fraud after many Egroup investors accused him of misappropriating their investment.

An entrepreneur known for his appearances on TV reality investment show Shark Tank Vietnam in 2018 and 2019, Thuy established Egroup in 2008 and turned it into a major education company with many well-known brands.

Its most popular is Apax Leaders, the chain of English teaching centers operated by its only listed subsidiary, Apax Holdings.

Since 2017 Egroup has been raising funds through two other subsidiaries, Egame and Ecapital, offering investors Egroup shares with a vesting period, usually of one year, during which they could not sell them.

Egroup promised that when the period expired it would find new investors to repurchase the shares or undertake the buyback itself at higher prices, or give the buyers more shares to prolong the vesting period.

The company said in 2017-18 that investors could earn 20-25% a year through this plan. It then reduced the returns to 17-18% in 2019-20 and 14-15% in 2021.

Until 2020 Egroup have been keeping its promises to investors and ensure that they have profits.

But then came Covid-19 and the company started to face financial difficulties as Apax Leaders centers were shut down, and it began delaying paying them their profits.

Egroup also sold bonds to investors and was again late in paying interest on them.

Between 2018 and 2021 it issued six tranches of bonds worth VND1.34 trillion with coupon rates of 12-15%, according to the Hanoi Stock Exchange.

Due to financial difficulties Egroup last year sought to delay its payment until 2028.

It also offered them other assets, even household appliances, in lieu of cash.

Broken promises

Egroup also delayed refund of fees students had paid to Apax Leaders centers, the backbone of its operations, since late 2019 after many parents in HCMC, Hanoi, Dak Lak Province, and Da Nang City accused it of failing to maintain the quality it promised.

With Apax Leaders struggling to record revenues, Egroup had to restructure it and said it completed the first round in March 2023 when it cut down the number of centers from a peak of 130 to 38.

But Thuy said parents in HCMC refused to let their children return to the centers and besieged them to demand refunds, and, without revenues, Egroup had to shut down many more.

Egroup chairman Nguyen Ngoc Thuy speaks to investors during an online meeting in August 2023. Screenshot taken by VnExpress

By the end of 2023 Apax Leaders owed parents refunds of VNVD94 billion ($3.79 million), according to the HCMC Department of Education and Training.

Following Thuy’s arrest Apax Leaders announced Tuesday that it would not continue refunds until the investigation is completed.

Thuy told investors in August 2023 that the company fell into a crisis by adopting a fast growth strategy with heavy dependence on debts.

But they demanded to know if Egroup and Thuy used their money to buy stocks, cryptocurrencies and properties.

Thuy replied that the company had never used investors’ money to buy stocks or crypto.

It had VND100 billion invested in stocks by 2022-end, which it said was the value of the shares of its subsidiary Ecapital.

Apax Holdings said it planned to invest VND300 billion in 2022 in a tourism project in the southern province of Ba Ria – Vung Tau, and in 2020 developed a residential project in the central province of Ha Tinh.

Thuy said the two were for a new product that combined travel and education.

Egroup and Apax Leaders also faced many complaints from staff, including foreign teachers, about non-payment of salaries.

As of February this year Egroup and its subsidiaries owed VND104 billion in social insurance debts, according to Hanoi authorities.

Many employees who quit have not received the salaries and insurance premiums they were promised.