Mekong Memo Vietnam 20230817
Mekong Memo Vietnam Weekly, August 17, 2023: Business, politics, finance, trade & legal headlines.
We monitor and filter the very best and most insightful business stories from Southeast Asia directly to your inbox every week.
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With that said, here is your Mekong Memo Vietnam for the week of August 17, 2023:
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VinFast Surges on NASDAQ Debut
By far the most exciting story this week is the incredible opening session on the first day of trading on the NASDAQ stock exchange.
VinFast, a Vietnamese electric vehicle (EV) manufacturer, merged with a Special Purpose Acquisition Company (SPAC), Black Spade Acquisition Co., in order to list. VinFast's shares soared 270% on their first day of trading, opening at $22 and closing at $37. This surge pushed VinFast's market capitalization to over $85 billion, surpassing industry giants like Volkswagen and Ford. The majority of VinFast's shares are held by Pham Nhat Vuong, Vietnam’s richest man and chairman of Vingroup, VinFast's parent company. Vuong's net worth increased by approximately $39 billion following the debut, making his estimated total net worth about $44.3 billion. Despite its success in Vietnam, where it is a household name, VinFast has faced challenges in the U.S. market, including poor reviews of its electric SUV, the VF 8. The company is not yet profitable, reporting a loss of $1.4 billion for the nine months through last September and carrying about $2.5 billion in debt as of the end of September. Nonetheless, VinFast has ambitious global expansion plans, including a new factory in North Carolina and a potential launch in Europe.
Some relevant insights as a result of this listing include the following:
Global Ambitions Amid Challenges: VinFast’s aggressive global expansion plans are notable, especially considering the company's recent establishment in 2017. It is venturing into highly competitive markets, where established players like Tesla dominate. How VinFast navigates these challenges, especially in light of its recent poor reviews in the U.S., will be crucial.
Impact of SPAC Mergers: VinFast chose to go public through a SPAC, a trend that has become increasingly popular for EV companies. This route can be quicker and less costly than a traditional IPO, but it comes with its own set of risks and challenges. The sustainability of the high valuation post-merger will be a key factor to watch.
Vietnam's Emerging Global Player: VinFast’s debut marks a significant milestone for Vietnam, as it is now the largest U.S.-listed Vietnamese company. This could potentially pave the way for other Vietnamese companies to enter global markets, reflecting Vietnam's growing role in the global economy.
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