Listing frenzy for FIEs and domestic giants

Several foreign companies are looking to list on the Vietnamese stock exchanges

Japan’s AEON Group, which has invested $1.18 billion in Vietnam since 2014, aims to double the number of its shopping centres in the country from the current six, according to Motoya Okada, president and CEO of AEON, during a meeting with Vietnamese Prime Minister Pham Minh Chinh in Tokyo in late November.

Okada stated that the Japanese retail giant believed Vietnam to be as vital as its primary market in Southeast Asia and that its network development strategy in the country was given high priority.

Specifically, Okada also added that the Japanese retail giant is mulling over its listing plan on the Vietnamese stock exchange as well as encouraging the sale of Vietnamese commodities to Japan, including seafood, clothing, and others.

With its high-profile brand, the Japanese group is an exemplary case for foreign-invested enterprises (FIEs) to raise funds from Vietnam’s public equity. Currently, the capitalisation of listed FIEs accounts for only about 0.3 per cent of the overall market size, which is far less than their local counterparts.

According to the Vietnamese legal corridor, FIEs that want to be listed on the domestic stock market must transform into JSCs. Former rules only allowed FIEs to invest in the form of limited liability companies. In a bid to woo more high-profile foreign funds, Vietnam has allowed FIEs to invest as JSCs.

“In 2003, the Vietnamese government allowed the pilot for several FIEs to be listed on the stock market under Decree No.38/2003/ND-CP on transforming several FIEs to operate in the form of a JSC, and under the prime minister’s Decision No.238/2005/QD-TTg enacted in 2005 on the percentage of participation of foreign parties in Vietnam’s stock market,” noted Nguyen Hung Quang, managing partner at law firm NHQuang & Associates. “The number of listed FIEs, notwithstanding, remains highly limited for a variety of reasons, the two most important of which being rules and the functioning of governmental agencies.”

Before AEON, in the 2003-2008 period, 10 FIEs went public, including Taya Vietnam Wire and Cable JSC, Chang Ceramics JSC, Hoang Gia International JSC, and Mirae JSC. To date, eight FIEs are still listed, with the others halting their listings due to gloomy business performance.

In 2020, AEON’s revenues in Vietnam stood at almost $621.7 million, with AEON Vietnam accounting for more than $308.7 million and ACS Trading making up for $165.2 million. With such small profits on a relatively big scale of equity, AEON must significantly improve its profits to qualify for a listing on local stock markets, which requires a return-on-equity of 5 per cent in the year preceding the application time.

Vietnam-based asset management firm VinaCapital is reportedly hoping to explore a listing opportunity overseas on the Singapore Stock Exchange in 2022.

The fund is working with an adviser on a prospective initial public offering (IPO) that may generate up to $183 million. According to the sources, the business has conducted negotiations with the regulator about the potential move, cited Bloomberg as of last week.

VinaCapital would be among those vying to be the first to list a special purpose acquisition company in Singapore’s major bourse.

Across the ocean, Vingroup’s automobile subsidiary VinFast has reaffirmed its listing plan in the United States, according to Le Thi Thu Thuy, vice chairwoman of Vingroup. “We are working on our plan to go public in the US, maybe in the next one or two years,” Thuy said in a recent interview with Bloomberg. “The sooner the better, but I believe a successful IPO will depend on a variety of factors. We are preparing for the introduction of the first electric vehicles in Vietnam. We currently have 25,000 orders and must deliver these to clients by the end of this year or early next year.”

In April, VinFast announced it was considering an IPO on the New York Stock Exchange (NYSE), potentially raising as much as $2 billion, valuing the automobile producer at around $50 billion. Previously, VinFast was rumoured to merge with a special purpose acquisition company for a US listing. Thuy also noted that the recent fruitful IPO of the US-headquartered electric carmaker Rivian, which is backed by Amazon, has been a poster child for other companies to follow in its footsteps.

Tech juggernaut VNG Corporation and e-commerce firm Tiki were said to be considering an international listing in the US and Singapore, respectively, within the next year or so, in order to tap into a large amount of foreign investment.

Meanwhile FLC Group’s Bamboo Airways last month announced its intention to list on Vietnam’s Unlisted Public Company Market (UPCoM) and the NYSE in the US in 2022. The airline has targeted to generate as much as $200 million by the issue of 5-7 per cent shares on the NYSE, bringing its market value to $4 billion.

Nguyen Khac Hai, deputy general director of Bamboo Airways, said the expected time for the UPCoM listing is in the first quarter of 2022, and the estimated reference price is not less than $2.60 apiece.