I. A roadmap to IPO by VinFast

In April 2021, Vingroup JSC (“Vingroup”) and Vietnam Investment Group JSC (“VIG”) bought 100% shares of Fiscus Consultancy Pte. Ltd – a company established and operating under Singapore law. This company was later renamed VinFast Trading and Investment Pte. Ltd. (“VinFast Singapore”). VinFast Singapore plans to change its name to VinFast Auto Ltd. after the application for initial public offering takes effect.[1]

On December 3, 2021, the Board of Directors of Vingroup approved the transfer of all contributed capital (51.52%) in VinFast Manufacturing and Trading Company Limited (“VinFast Vietnam”) into VinFast Singapore and to turn VinFast Singapore into the holding company of VinFast Vietnam (hereinafter generally referred to as “VinFast”). As of September 30, 2022, VinFast Singapore is jointly held by three shareholders, namely, Vingroup (51.52%), VIG (33.48%) and Asian Star Trading & Investment (15%).

In March 2022, VinFast entered into a memorandum of understanding with the State of North Carolina (US) on the construction of a manufacturing factory with an investment amount of USD 2 billion.[2]

On April 9, 2021, VinFast  Singapore, submitted a draft preliminary listing application form F-1 to the US Securities and Exchange Commission (“SEC”) forthe proposed public offering of common shares.

On November 25, 2022, VinFast celebrated a memorable milestone in its business growth since it first exported its new-launched electrical vehicle products to the US market as well as having announced that thousands more irrevocable deposits were to be transacted for the next year.

On December 7, 2022, VinFast Singapore officially submitted a registration application under Form F-1 to the SEC for the initial public offering. After the IPO, VinFast plans to list its common shares with the code “VFS” on Nasdaq (“National Association of Securities Dealers Automated Quotations”) Global Select Market, which is stricter and more advanced than the other two Nasdaq exchanges: Nasdaq Global Market and Nasdaq Capital Market.

In addition, from the official prospectus submitted by VinFast, we can observe some highlights in its approach to the US market:

• Upon the IPO in the US, VinFast is expected to sell only 5-10% of the shares, which means that foreign investors will only hold a maximum of 10% of the company’s charter capital.
• Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC and JP Morgan Securities LLC will act as lead bookkeeper and underwriters’ representatives for the proposed offering.
• BNP Paribas Securities Corp., HSBC Securities (USA) Inc., RBC Capital Markets, LLC and Wolfe/Nomura Alliance will also be co-creators. Robert W. Baird & Co. Incorporated acts as a co-manager.

II. Some remarks on VinFast’s case study

There are a number of reasons why VinFast decided on an IPO in the US from a holding company in Singapore. VinFast prefers to carry out the listing through VinFast Singapore because although Vietnamese laws allow a Vietnamese enterprise to conduct an IPO abroad, including the US, there are not enough detailed regulations and connections with the US legal framework and its market yet. Meanwhile, Singapore is a spot that has already had such connections.

• There are still certain barriers for Vietnamese enterprises to list on foreign exchanges. For example, a limitation on the percentage of foreign investors’ ownership in some business lines makes it less attractive for domestic businesses to issue shares and list in foreign countries.
• Another holdback for Vietnamese companies to IPO and list on foreign exchanges are the challenges to meet and adapt to the regulations and standards of such foreign stock markets, specifically, the gap in accounting, auditing and corporate governance standards. Currently, the US stock exchanges apply International Financial Reporting Standards (“IFRS”), meanwhile, the Vietnamese Government is promoting its adaptation and compliance from its local framework. It will not be until 2025 that all domestic listed businesses are required to comply with IFRS.[3]

Moreover, the IPO story of VinFast provides other local enterprises some useful recommendations for their potential entry into foreign stock markets.

• Good understanding and thorough strategy of preparation

The planning and preparation for this process must be followed with execution. For example, a route to lower the support from the holding of Vingroup as well as choose an appropriate corporate structure with a Singaporean legal entity is proof of well planning. Also, when deciding to list on Nasdaq, VinFast itself has shifted the concern to exit accumulated losses to other compliable requirements such as market capitalization, share pricing, etc., and Nasdaq has lower and easier conditions for IPO businesses than the New York Stock Exchange (“NYSE”).[4]

• Associated partners

The contribution of well-known investment bankers is considered a great factor of an ambitious IPO overseas. In VinFast’s case, the largest names are present as underwriters, suppliers, bookkeepers, co-creators in its prospectus. Moreover, VinFast demonstrates its seriousness and clear goals in the entry to such a complex stock market as the US. They also shows their aspects of transparency and clarity on both strengths and difficulties to be encountered with detailed descriptions so that investors, especially, US professional investors can recognize potential risks and increase their attraction to investing into the business. Otherwise, if the published disclosure is too flashy or ambiguously “painted” to hide something in a mask, investors may find it unpersuasive and insufficient of information for investment.

• Sensitivity to opportunities from the economic and market movement

The US’ IPO market  broke records in 2021 along with the rise of the special-purpose acquisition company (“SPAC”) model in IPO.  However, in 2022, the US market experienced domestic economic difficulties with new policies regulating SPAC and interest rates. In addition, the COVID- pandemic and Ukraine-Russian crisis in the world and obstacles for Chinese companies participating in IPOs in the US create a delay and decrease to the IPO trend, while, at the same time, creates incentives and opportunities for companies from other emerging countries to IPO.

[1]https://www.sec.gov/Archives/edgar/data/1913510/000119312522299157/d274483df1.htm

[2] https://thanhnien.vn/vinfast-chinh-thuc-nop-ho-so-niem-yet-len-san-chung-khoan-my-post1529354.html

[3] According to Decision No.345/2020/QD-BTC issued on March 16, 2020 by Ministry of Finance.

[4] https://genk.vn/cac-chi-tiet-quan-trong-trong-ban-cao-bach-cua-vinfast-nhung-diem-tuong-dong-voi-ipo-lon-nhat-trong-lich-su-va-3-bai-hoc-gia-tri-cho-doanh-nghiep-viet-nam-20221213170943328.chn