The IPO dilemma for Vietnam’s four tech unicorns

[HO CHI MINH CITY] An initial public offering (IPO) is music to the ears for both entrepreneurs and investors. They seek to reap rewards from their early bets on innovative businesses or tap a larger capital pool to drive growth.

Over in Vietnam, the tech community is still waiting for the first major local IPO of one of its home-grown startups to inspire more founders and venture capitalists who have mostly deployed their exit via trade sales.

The hopes largely rest on the South-east Asian country’s four tech unicorns – startups valued at over US$1 billion – with many investors hoping that one or more of them can do something about the dearth of tech listings on local bourses.

The Business Times takes a closer look at these four tech giants and their plans to go public in their home country.

1. VNG 

In August 2023, tech company VNG created a buzz as it filed for a listing in the United States, just a week after electric automaker VinFast’s debut on the Nasdaq stock exchange in New York. 

VNG had expressed intentions to launch an IPO from as early as 2017, about three years after achieving unicorn status.

Seven years have passed and executives at VNG are still waiting for the right timing to do so. VNG withdrew its US listing registration earlier this year, reportedly due to unfavourable market conditions.

Formerly known as VinaGame, VNG was founded in 2004 as a game publisher. While games remain its largest source of revenue, the company has extended its offerings to include music sharing, video streaming, messaging, news aggregation, cloud services and mobile payments.

In January 2023, VNG listed its shares on Vietnam’s UPCoM, a market for unlisted public companies, without raising additional funds. It has remained in the red for three consecutive years, making it ineligible for a traditional IPO at home.

At the close of trading on Friday (Jun 7), VNG shares traded at 550,000 dong, down by about 16 per cent year to date, giving it a market capitalisation of around 15.3 trillion dong (S$813.4 million).

This is less than a third of the US$2.2 billion valuation recorded in the 2019 financing round led by Singapore investment company Temasek Holdings.

2. VNLife

Fintech unicorn VNLife – the parent company of payment solutions provider VNPay – is mulling over a strategic trade sale as a potential exit option for shareholders versus a stock offering via an IPO.

VNLife chief executive Niraan De Silva said this at the Tech in Asia summit in Ho Chi Minh City on May 30, adding that a “strategic liquidity event” was more probable given that an IPO attempt – be it in Vietnam or overseas – would be “too complex” at this point.

He added that Vietnam’s heavy retail investor base is generally inexperienced in grasping complex technology businesses, which might see prolonged periods of unprofitability due to their high-risk ventures.

Meanwhile, going for an overseas IPO could be challenging as local firms have to restructure their capital bases abroad and raise funds in public markets that have limited interest and knowledge about Vietnamese companies, he said.

VNLife is also not seeking another fundraising round as it is profitable and “very well capitalised”, De Silva told BT.

VNLife is the only Vietnamese tech unicorn to achieve profitability for years. It reached unicorn status when it closed a US$250 million Series B round in 2021, two years after securing US$300 million from the SoftBank Vision Fund and Singapore’s sovereign wealth fund GIC.

Founded in 2007, the tech firm has expanded its services to include four segments – banking enablement, digital payment, online travel and new retail. Its subsidiary VNPay’s QR-code payment system is now integrated into over 30 bank apps and eight e-wallets.

3. M_Service (MoMo)

Established in 2007, M_Service is the company behind Vietnam’s most popular e-wallet MoMo. The company’s website states that it serves 31 million users, roughly a third of the country’s population of nearly 100 million.

M_Service reached unicorn status in 2021 after raising over US$200 million in a Series E funding round led by Japan’s Mizuho Bank, valuing the company at more than US$2 billion.

Earlier that year, former MoMo chief executive Pham Thanh Duc told Reuters that an IPO was “a must” for the firm and that it should aim to go public by 2025.

Last September, current CEO Nguyen Manh Tuong called for a government task force to support tech companies seeking funds from public markets, both domestically and internationally. 

According to Vietdata research, MoMo was the second highest-grossing e-wallet with constant revenue growth from 2020 to 2022. However, the company suffered from significant losses, which swelled 30 per cent year on year to nearly 1.15 trillion dong in 2022.

With this financial performance, M_Service is not eligible for an IPO under local regulations, which require aspirants to be profitable for at least two consecutive years and have no accumulated losses as of the year of registration for listing.

4. Sky Mavis

The Vietnamese unicorn that is often overlooked for a standard IPO is Sky Mavis, the blockchain game studio behind the play-to-earn hit Axie Infinity. 

Founded in 2018, the firm is headquartered in Singapore, although the majority of its team operates from the Vietnam office. They occupy two floors in a 25-storey tower located in the bustling central business district of Ho Chi Minh City. 

It is not uncommon to see a crypto firm trying to go public, especially in the US market where virtual assets are highly regulated. However, Sky Mavis founders have never spoken publicly about an IPO. Most projects in the blockchain space raise funds from the public via non-conventional methods.

In late 2020, Axie Infinity publicly sold its digital token, named AXS, for the first time on Binance – the world’s largest cryptocurrency exchange. It secured nearly US$3 million worth of funding from global crypto investors in the initial exchange offering. 

This was followed by a series of venture capital injections into parent company Sky Mavis, which then valued the firm at nearly US$3 billion in 2021. AXS reached its peak of US$164.90 per token in the same year, which is 19 times higher than its price today.

Sky Mavis’ valuation was lowered to US$1.95 billion in its latest funding round last year, which took place after US$620 million worth of cryptocurrency was stolen from the company’s blockchain network in the biggest-ever such heist in early 2022.

DealStreetAsia reported that the Vietnamese gaming unicorn’s loss ballooned 78 times to US$18.89 million for FY2022 ended March 31, during which its revenue trebled to US$1.77 million.