IPO frenzy intensifies

Some Vietnamese companies have attempted to list in the United States for years. Photo: Le Toan

Vietnam’s very first unicorn and tech behemoth VNG Corporation last week was allegedly mulling over an overseas listing in the US via special purpose acquisition company route, or SPAC, to tap into the huge chunks of foreign cash.

The online gaming, tech, and e-commerce firm is working with financial advisers to hold discussions with SPACs for a potential deal and a transaction could value VNG at $2-3 billion, according to Bloomberg.

If successful, VNG will be the first Vietnamese corporation to land a listing opportunity overseas on the US’ major exchange after several aborted deals. A VNG representative, however, declined to comment on whether an agreement on SPAC or a conventional IPO route had been finalised.

VNG is among several Southeast Asian unicorns joining the parade of regional peers looking for US listings through SPACs, following in the footsteps of Singapore’s PropertyGuru and Indonesia’s Traveloka.

VNG’s tech-driven portfolio ranges from gaming services and message app Zalo to e-wallet ZaloPay and cloud computing. In addition, it also invests in other startups such as Tiki, Ecotruck, Got It, and FPT Online. The group boasts around 80 million users.

Foreign shareholders like Tencent still own the right to buy over one billion ordinary shares of VNG (equivalent to 2.88 per cent of the group’s stake) until the end of 2021.

VNG’s major foreign shareholders currently include Tenacious Bulldog Holdings Ltd., Prosperous Prince Enterprises Ltd., and two Singapore sovereign funds, GIC and Temasek.

PropertyGuru, meanwhile, is set to trade soon on the New York Stock Exchange. The transaction is expected to close in the fourth quarter of 2021 or the beginning of 2022, subject to regulatory and stockholder approvals as well as other customary closing conditions.

PropertyGuru Pte., Ltd., one of Southeast Asia’s leading property technology companies, and Bridgetown 2 Holdings Ltd., a SPAC formed by Pacific Century Group and Thiel Capital LLC, announced last month that they have entered into a business combination agreement.

In the same boat, Ho Chi Minh City-based delivery startup Loship last week announced its target to make a debut on the New York Stock Exchange by 2024 after reaching profitability in 18-24 months. Earlier this month, Loship bagged a $12 million pre-series C funding round co-led by BAce Capital, Ant Group-backed venture capital firm, and Sun Hung Kai & Co., Ltd., a leading investment company from Hong Kong.

Elsewhere, the Vietnam Competition and Consumer Authority under the Ministry of Industry and Trade received valid documents about the economic concentration of Tiki JSC and Singapore-based Tiki Global. Accordingly, Tiki will transfer 90.5 per cent of its shares to Tiki Global after issuing more shares under a private placement. Ngo Hoang Gia Khanh, deputy general director for Business Development at Tiki, said that the company aims to develop another business entity in Singapore to facilitate future development. “Tiki has plans to develop a tech hub to attract and develop its own pool of engineers,” Khanh stated.

In July, Tiki Global became the parent company of Tiki in Vietnam with a market valuation of $741 million. Tiki Global currently owns 90.54 per cent of Tiki following the latter’s private placement to increase capital from $10.1 million to $106.7 million.

According to experts, e-commerce platforms are incurring losses to acquire market share. With the new entity in Singapore, Tiki aims to raise more offshore capital via SPACs targeting Southeast Asia.

However, the SPAC route for Vietnamese companies going abroad will encounter certain bumps in the road. In May, VinFast – the vehicle arm of Vietnam’s biggest conglomerate Vingroup – delayed its IPO on the New York Stock Exchange due to heightening scrutiny over US regulations on SPACs. VinFast had been working with Credit Suisse, JPMorgan, and Deutsche Bank in preparation for the US listing.

Bamboo Airways, a subsidiary of FLC Group, also revealed its ambition to cash in on an overseas IPO in the US in this quarter.

But representatives of VNLife, the parent company of VNPAY and also Vietnam’s second unicorn, have said it is still “years away” from a potential IPO.

According to Kent Wong, partner, head of Banking and Capital Markets at VCI Legal, the SPAC bubble has burst due to growing concerns over explosion of blank check companies and the impact on retail investors.

“The drawback is that Loship, VNG, and Tiki will have to create a lot of hype to draw retail participation in the US in the short term, and not having a recognisable brand in that market will be a disadvantage,” Wong told VIR. “On top of that, they will need a bona fide business plan and solid target companies to merge or acquire with the raised capital.”

Golden Gate Ventures also believes that other prominent tech names from Southeast Asia are set to go public through SPACs, and “there are still plenty of untapped opportunities in the region compared with China or India”, according to Vinnie Lauria, managing partner of the fund.