Pawn shop chains raise big bucks to expand

Leading jeweler Phu Nhuan Jewelry (PNJ) recently announced that it would acquire a 30 percent stake in pawn shop chain Golden Friend Jsc.

The Ho Chi Minh City-based pawn shop chain was founded in 2017 with a charter capital of VND1 billion ($43,400), which was raised after six months to VND10 billion.

The company introduces itself as a strategic partner of PNJ. It has 21 pawn shops, all located inside PNJ stores.

Earlier this month, HCMC-based pawn shop chain T99 raised VND20 billion from a famous singer, after having received a similar amount from another celebrity last year.

Another chain, F88, one of the earliest pawn shops chains in the country, raised VND10 billion from a celebrity in 2019 after receiving funds from foreign investors like Mekong Enterprise Fund III and Granite Oak. The chain has 180 shops in 25 localities.

Pawn shop chains have become more popular in recent years, as they attract customers by offering more professional services than traditional pawn shops.

Some of them say customers can get a loan money in 15-30 minutes via a quick review process for collateral assets, which can include smartphones, jewelry, motorbikes and cars.

Most chains have been posting impressive growth figures. F88 last year saw outstanding loans rise 230 percent from 2019 while revenues rose 220 percent. The actual figures were not disclosed.

The chain, which has nearly 2,000 employees, saw its equity rise 160 percent last year. It raised VND400 billion through bonds last year.

Another chain, Vietmoney, saw its revenue rise 270 percent year-on-year last year. It has recently sold a 30 percent stake to two foreign investment funds.

T99, which only entered the market earlier this year, targets having 500 shops nationwide in the next three years and to list on the stock market.

Observers say that the pawn shop industry has high growth prospects thanks to a high demand for quick loans.

Around 48 percent of the population has incomes of under $300 per month, and these are potential customers for consumer loans, according to financial data service provider FiinGroup.

The CEO of F88, Phung Anh Tuan, said it is estimated that 70 percent of Vietnamese citizens still lack access to professional financial services, and this means there is great growth potential for the pawn shop industry.

Le Dat Chi, deputy head of the School of Finance under the University of Economics Ho Chi Minh City, told local media that as there are many Vietnamese who are not eligible to receive loans from banks, pawn shop chains will serve their credit demand.

However, more regulations are needed to manage this type of service so they will not be taken undue advantage of by loan sharks, which could have bad consequences for the financial system, he added.