Vietnam tycoon gets US$39 billion richer overnight after VinFast’s Nasdaq listing
ITS electric cars have been dogged by poor reviews, and it’s on pace to make fewer sales this year than General Motors (GM) does in a week.
Yet that hasn’t stopped VinFast Auto from becoming the latest beneficiary of speculative fervour around newly minted special purpose acquisition company (Spac) deals – many of which end up tumbling over the long term.
The Vietnamese automaker’s shares surged 255 per cent on Tuesday (Aug 15) when it debuted on the Nasdaq Global Select Market, pushing the company’s market capitalisation above that of industry giants GM and Mercedes-Benz Group.
It added US$39 billion to the net worth of chairman Pham Nhat Vuong, Vietnam’s richest man, whose fortune now stands at US$44.3 billion according to the Bloomberg Billionaires Index.
This is the latest example of a thinly traded company soaring on its debut after completing a merger with a Spac. Many have experienced eye-popping rallies that ended a few trading sessions after the merger closed, as traders look to make a quick profit on companies with limited shares – meaning the jump in Vuong’s wealth may be short-lived.
De-Spacs – the term for firms that go public via a Spac merger – that have made their debut this year have slumped by a median of about 45 per cent, with 18 of them wiping out more than 70 per cent of their value, according to data compiled by Bloomberg.
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Regulatory filings show that Vuong directly and indirectly controls 99 per cent of the company’s outstanding shares, mostly through his conglomerate, Vingroup.
That large stake limits the shares available for other investors to trade, meaning the stock is prone to large swings. The Bloomberg Billionaires Index did not previously include Vuong’s stake in the carmaker, which he founded in 2017.
If VinFast can hold onto its gains, it will be in a somewhat unique position, given the dismal performance of other electric automakers taken public via Spacs. Such companies include Lordstown Motors, Nikola and Faraday Future Intelligent Electric, all of which lost more than 90 per cent of their market value since their mergers.
VinFast, though, has been weighed down by operational problems. In May, it recalled all electric sport utility vehicles shipped to the US over a software malfunction. The company also cut some of its US workforce, sales have been modest, and its net losses are widening.
“There have been some negative reviews,” VinFast chief executive officer Le Thi Thu Thuy told Bloomberg Television on Tuesday. “We take them very close to our heart, we reflect on the feedback from those reviews, and we make our vehicles better.”
In the six years that it has been operating, VinFast has taken in US$9.3 billion of financing to cover its operating and capital expenditures, much of it coming from Vuong’s other businesses.
Still, the company, which began building a factory in North Carolina last month, forecasts sales will reach 45,000 to 50,000 this year. Vuong predicts it will break even by the end of 2024.
VinFast had been planning a normal initial public offering, but scrapped that and opted for a Spac listing after investor appetite for money-losing startups waned over the past year. Instead, it agreed to merge with blank-cheque company Black Spade Acquisition, founded by casino mogul Lawrence Ho.
Vuong, who studied geo-economic engineering in Russia, made his fortune in the 1990s in Ukraine with a business making instant noodles.
The Hanoi-born businessman sold it to Nestle in 2010, nine years after he had returned to Vietnam.
By that time, he had already established publicly traded Vingroup, focused on real estate, resorts, schools, shopping malls and more. The firm booked revenue of US$4.4 billion last year, and remains a major shareholder in VinFast.
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