Yet that hasn’t stopped VinFast Auto Ltd. from becoming the latest beneficiary of speculative fervour around newly minted SPAC deals — many of which end up tumbling over the long-term.
The Vietnamese automaker’s shares surged 255% Tuesday 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 AG.
It added US$39 billion (RM180bil) to the net worth of chairman Pham Nhat Vuong, whose fortune now stands at US$44.3 billion, according to the Bloomberg Billionaires Index.
Vuong is US$39bil richer following the listing of VinFast on Nasdaq. - Bloomberg
At the current market capitalisation, VinFast is about six times bigger than Chinese EV maker XPeng Inc., which went public in the US in 2020.
VinFast is the latest example of a thinly traded company soaring on its debut after completing a merger with a special-purpose acquisition company. 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 seen a median slump of about 45%, with 18 of them wiping out more than 70% of their value, according to data compiled by Bloomberg.
Regulatory filings show Vuong, Vietnam’s richest man, directly and indirectly controls 99% of the company’s outstanding shares, mostly through his conglomerate, Vingroup JSC.
That large stake limits the shares available for other investors to trade, meaning the stock is prone to large swings. The Bloomberg Billionaires Index hasn’t previously counted Vuong’s stake in the carmaker, which he founded in 2017.
“The stock will be very volatile until more shares are available for trading,” said Jay Ritter, a finance professor at University of Florida.
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, including Lordstown Motors Corp., Nikola Corp. and Faraday Future Intelligent Electric Inc., all of which lost more than 90% of their market value since their mergers.
VinFast, though, has been weighed down by operational problems. In May, it recalled all the electric sport utility vehicles shipped to the US over a software malfunction and there have been some negative reviews. 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 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 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 and 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-check company Black Spade Acquisition Co., 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 SA in 2010, nine years after he had returned to Vietnam.
By that time, he’d already established publicly-traded Vingroup JSC, 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.
VinFast CEO Thuy said the EV maker would be shifting to a new "hybrid model" for sales, bringing in distributors and dealers for overseas markets. Since it announced its overseas expansion plans, VinFast had been counting on just using its own showrooms, like Tesla does.
"Opening our own stores is great but it takes a lot of time," she said. "Joining forces with other partners to go faster has always been our nature."
VinFast opened 122 showrooms globally as of June, the company said, concentrated on the US West Coast.
Founder Vuong had said in May that VinFast could sell 50,000 EVs this year. Through the first seven months, it has sold over 16,000, including its sales in Vietnam. That includes sales of just 137 of its VF8 model in the United States, the only model it currently sells there. — Bloomberg/Reuters
