Be Group borrows 60 million USD to increase competitiveness in Vietnam market

Last week, Bloomberg reported, Be Group – the owner of the be application – received a loan of at least $ 60 million from Deutsche Bank (Germany) to increase its competitiveness in the Vietnamese market. CEO Vu Hoang Yen said the loan includes a provision that allows increasing financing up to $100 million.

The above capital will be used to expand and improve 3 core services including online car ordering (4-wheeler, 2-wheeler), food delivery and Cake by VPBank; as well as opening new markets, and new services. Be Group’s further goal is to become “Vietnam’s leading consumer platform”.

Launched at the end of 2018, be is a rare Vietnamese ride-hailing application capable of competing with strong foreign technology and financial competitors such as Grab (Singapore) and Gojek (Indonesia). At the time of launch, when asked by the press about whether the ride-hailing market was considered “money-burning” and required businesses to have great financial potential, the co-founder and CEO of Be Group at that time – Mr. Tran Thanh Hai said that the company has an investment capital of trillions of dong, mobilized from shareholders and own capital.

Regarding his background, Mr. Tran Thanh Hai has a mother who is a member of the Cambodian Royal Family and is the grandson of Prince Norodom Sihanouk. Before Be Group, this businessman was known as the co-founder and former Technical Director of VNG.

Mr. Tran Thanh Hai, former CEO of Be Group. Photo: Be Group

In December 2019, Mr. Hai resigned as General Director of Be Group after 1.5 years of working for personal reasons. Mr. Hai was replaced by Mrs. Nguyen Hoang Phuong – who previously held the position of the chief operating officer. By September 2021, Ms. Phuong also left this company.

Ms. Vu Hoang Yen – who sits in the “hot seat” is now a graduate of the London University of Economics, with extensive experience in e-commerce, banking and finance and digital transformation. Ms. Yen has worked at businesses such as Adayroi (VinGroup), Agoda, Hoan My Medical … In 2019, this female CEO was voted by Forbes Vietnam magazine as one of the Top 10 Female Professional Managers.

The development process of Be Group. Source: Be Group

Be Group’s ecosystem includes transportation, delivery, food delivery, shopping, insurance, telecommunications and financial services. The be application operates in 28 provinces and has reached more than 20 million downloads.

According to self-published information, in the first quarter, be had more than 1.5 million monthly active users who transacted on the platform. Particularly in the key market of Ho Chi Minh City, revenue increased 2 times in the first half of the year.

Accumulated loss is nearly 2,500 billion dong and negative equity

Similar to Grab, Gojek and other ride-hailing apps, profitable business is still a problem that Be Group needs to find a solution to. By the end of 2021, Be Group “carried” a cumulative loss of more than VND2,466 billion. In which, in 2019, the company recorded a loss of more than 1,500 billion dong and the next two years, respectively, 492 billion dong and 384 billion dong. Equity as of December 31, 2021 is -373 billion dong.

On the rival side, Grab Vietnam and Gojek Vietnam recorded accumulated losses of more than VND 4,300 billion and more than VND 4,000 billion by the end of last year, respectively.

Be Group’s net revenue in the past 3 years is slightly higher than Gojek Vietnam but still quite small compared to Grab Vietnam.

Regularly launching advertising and promotional programs – to retain old customers and attract new users – makes Be Group’s selling expenses always higher than gross profit. However, this cost tends to decrease over the years, from nearly 1,444 billion VND in 2019 to 627 billion VND in 2020 and nearly 392 billion VND in 2021.

The Vietnamese ride-hailing market is considered to be full of potential for development. In 2021, the Ministry of Industry and Trade estimates the revenue of this model at about 2.4 billion USD with an average growth rate of 30-35% per year since 2015. In the field of the digital economy, the growth rate of Users of online ride-hailing are second only to e-commerce. It is expected that online car-hailing revenue can touch 4 billion USD by 2025.

At the seminar “Competitive problem for the ride-hailing market in the new normal period” organized by the Ministry of Industry and Trade in March, all opinions said that the competition in the Vietnamese market after Covid-19 will become more intense. Not only compete on service fees, companies also compete with each other on customer experience and service diversification on the platform. This active competition will bring certain benefits to users, including riders and drivers.

Users will benefit more, the interests of consumers will be more secure. However, that creates challenges and great pressure for potential businesses wanting to enter the market.

Source: CafeF