Pawn shops are raising a lot of money to grow

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

The Ho Chi Minh City-based pawnbroker chain was founded in 2017 with registered capital of VND 1 billion ($ 43,400), which increased after six months to VND 10 billion.

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

Earlier this month, HCMC-based pawnshop chain T99 raised VND 20 billion from a famous singer, after receiving a similar amount from another celebrity last year.

Another chain, F88, one of the country’s leading pawn shops, raised VND 10 billion from a celebrity in 2019 after receiving funds from foreign investors like Mekong Enterprise Fund III and Granite Oak. The chain has 180 stores in 25 locations.

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

Some of them say clients can get a loan in 15 to 30 minutes through a quick collateral asset review process, which can include smartphones, jewelry, motorcycles, and cars.

Most of the chains show impressive growth figures. Last year, the F88 saw outstanding loans increase 230% from 2019, while income increased by 220%. Actual figures were not disclosed.

The chain, which has nearly 2,000 employees, saw its equity increase by 160% last year. He raised VND 400 billion through bonds last year.

Another chain, Vietmoney, saw its revenues increase by 270% compared to last year. He recently sold a 30 percent stake to two foreign investment funds.

T99, which only entered the market at the start of the year, aims to have 500 stores nationwide over the next three years and be publicly traded.

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

According to financial data service provider FiinGroup, around 48% of the population has incomes below $ 300 per month, and these are potential customers for consumer loans.

F88 CEO Phung Anh Tuan said it is estimated that 70% of Vietnamese citizens still do not have access to professional financial services, which means that there is great potential for growth for the industry. pawn shops.

Dat Chi, deputy director of the School of Finance at Ho Chi Minh City University of Economics, told local media that as many Vietnamese are not eligible to receive bank loans, the chains of pawn shops will respond to their credit application.

However, more regulations are needed to manage this type of service so that they are not unduly exploited by loan sharks, which could have bad consequences for the financial system, he added.