Seedcom names bond issuance as main channel for capital mobilisation

Seedcom issued 500 bonds worth VND50 billion ($2.17 million) in April

In a talk with VIR, Nguyen Hoang Tien, CEO of Seedcom, said that the bond issuance in April has yielded positive results, potentially becoming the best option for capital mobilisation from now on.

“The recent issuance of 500 bonds worth VND50 billion ($2.17 million) is our trial to test the taste of the local capital market,” said Tien. “Luckily, the results are very positive and we know what we should do at the next steps.”

In comparison with calling for investment and taking out bank loans, bond issuance has been drawing attention in recent years, according to local market research company FiinGroup. The local bond market saw impressive growth in scale, from VND100 trillion ($4.35 billion) in 2016 to VND300 trillion ($13 billion).

Accordingly, capital flows from the bond issuance will be used to continually invest in companies specialised in food and beverage (F&B), fashion, supermarkets, and technology.

Tien said that the sectors all play an important role in Seedcom’s development. They have been in the expansion progress, demanding such a large investment, necessitating the constant mobilisation of investment.

Seedcom has continued pouring capital into The Coffee House despite its prolonged losses. As of the end of 2019, The Coffee House recorded a deficit of nearly VND80 billion ($3.48 million) over three years of operation.

Tien said that F&B is one of the sectors maintaining growth under the health crisis, with Business Monitor International forecasting the sector' growth in 2019-2021 at 11 per cent per annum. Ordering via food delivery platforms is growing in popularity, so Seedcom's investment in The Coffee House is understandable.

“We aim to bolster The Coffee House’s annual growth rate to 40-50 per cent in the next five years,” he added. “We will continue investing in applying technologies in the coffee store chains to assure smooth operations as it reaches fast growth.”

Nevertheless, under the COVID-19 resurgence early this year, Seedcom surprised the Vietnamese market by withdrawing the entire capital from a string of fashion companies such as Eva de Eva.

Explaining the decision, Seedcom stated that the firms no longer suit its directions, including technology development and automating business operations to reach sustainable growth.

Moreover, as the health crisis continues hampering the local economy, people have been spending more time at home, resulting in less demand for clothing and fashion items. Indeed, the chains have been submerged in hefty losses for years now, warranting the exit by Seedcom.