THACO Group to sell 10 per cent stake in THACO Auto

Shandong Heavy Industry Group Co., Ltd teams up with THACO Group

On October 19, China’s Shandong Heavy Industry Group Co., Ltd (SHIG) and Vietnam’s Truong Hai Group (THACO Group) inked a strategic collaboration agreement in Hong Kong, underlining Vietnam's pivotal role as a strategic market in Southeast Asia for the next 5 -10 years.

Under this strategic alliance, SHIG is poised to enhance its presence in the commercial vehicle sector, with THACO Group, thereby extending its range of bus and truck offerings while venturing into uncharted territories within Vietnam's burgeoning automotive industry.

Moreover, SHIG is committed to assisting THACO Group in charting a path towards strategic transformation, elevating the quality of Vietnam's automotive industry.

SHIG, headquartered in Jinan, Shandong province, a Chinese leading multinational industrial equipment group with significant global influence.

The group owns well-known enterprises in China such as Weichai Power, Sinotruk, Weichai Lovol Intelligent Agriculture, Shantui, Lovol Construction Machinery, Zhongtong Bus, Fast Transmission, Hande Axle, as well as international well-known brands such as Ferretti in Italy, KION Group and Linde Hydraulics in Germany.

In late June, VIR reported that THACO Group disclosed ongoing discussions with foreign investors to offload a 10 per cent equity stake in its auto division, THACO Auto.

Nguyen Hung Minh, vice chairman of THACO Group said, “The sale of 10 per cent of shares in THACO Auto is meant to raise funds for production and business, investment in expanding the retail system and development of new products.”

While negotiations are ongoing and no decisions have been made, Minh mentioned that THACO expects to complete the deal this year, as reported by VNExpress.

Meanwhile, Ho Chi Minh City Securities Corporation (HSC), THACO’s financial advisor, has been working on this plan.

News of the impending listing garnered investor interest, with shares of THACO Auto trading on the Over-The-Counter (OTC) market. However, the listing proposal never materialised.

In 2017, the notion of an IPO resurfaced, catapulting THACO Auto's share prices on the OTC market. Nevertheless, the listing ambitions remained unfulfilled.

In 2019, THACO Auto privately issued over 30.3 million shares to strategic shareholder Jardine Cycle & Carriage at VND128,500 per share, implying an approximate valuation of $5.4 billion at that time.

Unexpectedly, in 2021, THACO Auto declared the cancellation of its public company registration due to failure to comply with the 2019 Securities Law concerning shareholder structure.

The move to abandon public registration was part of THACO's blueprint for multi-sector development restructuring. This change steered the entity towards a diversified portfolio, encompassing real estate, industry, agriculture, retail, logistics, and more, instead of THACO Auto - the automotive division.

Following the restructuring, the latest business registration records indicate that Thaco Group boasts charter capital of over $1.266 billion, with Thaco Auto accounting for $329.1 million, wholly owned by Thaco Group.

Concerning THACO's shareholder structure, three principal groups are currently in play. According to the newswire, THACO’s chairman Tran Ba Duong and his family control over 70 per cent of the shares, with foreign investors including Jardine Cycle & Carriage laying claim to 26 per cent of the shares. Additional minor shareholders are also present.

In July 2023, THACO publicly revealed its engagement with Ho Chi Minh City Securities Corporation to craft a blueprint for issuing new shares to strategic investors.

A source told Reuters in June that this potential deal has been anticipated to assess THACO Auto at approximately $5 billion.

Presently, THACO Auto assumes the roles of manufacturer, assembler, and distributor for numerous reputable brands in Vietnam, including KIA, Mazda, Peugeot, BMW, Foton, Mitsubishi, and Thaco Bus.

With a vast network of over 400 showrooms and authorised service centres, THACO Auto has seen sales figures reach 111,440 vehicles in 2022, emerging as the market leader in Vietnam with a 38 per cent market share, a number that escalates to 130,300 vehicles when the entire THACO Group is considered.

In 2022, THACO Group reported an after-tax profit surpassing $313.1 million), with owner's equity exceeding $2.04 billion. In 2021, the group achieved a profit of $22.33 million.

However, 2023 has posed challenges to the conglomerate's business prospects, given the global economic backdrop. In the first six months of the year, THACO Group disclosed an after-tax profit of around $45.4 million, marking a 78 per cent decrease compared to the corresponding period in 2022.

THACO Group seeks to sell 10 per cent stake in THACO Auto THACO Group, the conglomerate led by Vietnamese billionaire Tran Ba Duong, is looking for investors to acquire a 10 per cent stake in THACO Auto, its subsidiary specialising in vehicle manufacturing and sales.