38 ASIAN LEGAL BUSINESS – OCTOBER 2023 WWW.LEGALBUSINESSONLINE.COM CAPITAL MARKETS The prospect of access to highvalue global investors, raising large capital in quick time and increased presence on international markets have prompted many Vietnamese companies to look at going public on U.S. stock exchanges over the years. But, unstable market conditions in recent years and regulatory hurdles at home have meant only a few have managed to complete the process. Two recent listing announcements could provide a way forward for others with their eyes on the global capital markets. In August, Vietnamese electric automaker VinFast listed on the U.S. stock exchange Nasdaq through a $23 billion merger with special purpose acquisition company (SPAC) Black Spade Acquisition. This was closely followed by Internet company VNG announcing a proposed $150 million initial public offering on the New York Stock Exchange, a deal that has been put on hold until next year due to volatile market conditions, Reuters reported. Other companies from the country, including Bamboo Airways, e-commerce platform Tiki, and retail company CrownX, have all expressed interest in listings in the U.S. over the last few years, but have deferred their plans on account of unstable market conditions and other internal considerations. The backdoor listing of VinFast and proposed listing of VNG could serve as a pathway for others looking to list offshore, says Nguyen Van Hai, a capital markets partner at Vietnamese law firm YKVN. This is particularly the case among start-ups and technology companies that may not be able to list in Vietnam, given the country’s rules do not allow companies operating at a loss to go public, explains Nguyen. Vietnamese companies are no exception to the global trend among tech start-ups, including Snap and Uber, of operating at a loss for a longer period as they spend venture capital on customers and prioritise market share over profits. But the U.S. has found few takers so far. And it could be that given the dry spell Vietnamese companies have had in capital markets over the last few years, companies “may have wanted to witness a Vietnamese company take a pioneering step to list on an offshore stock exchange before taking steps themselves,” Nguyen says. While Nguyen says that it is a misconception that listing on offshore exchanges, particularly the U.S., is exceptionally complex, he does admit that Vietnam’s regulatory framework – or lack of it – makes the process challenging. INSUFFICIENT FRAMEWORK Vietnam’s regulatory framework for offshore listings is in its nascent stage, and companies like VinFast and VNG have used holding companies in Singapore and the Cayman Islands, respectively, as listing entities. “The local framework, for the time being, is not fully equipped to facilitate a direct listing of a Vietnam-incorporated The backdoor listing of VinFast and proposed IPO of VNG on U.S. stock exchanges have shed light on new paths for Vietnamese companies to raise capital in a volatile market, but they do not come without their share of stiff regulatory hurdles. BY NIMITT DIXIT NEW YORK CALLING Image: ItzaVU/Shutterstock.com
RkJQdWJsaXNoZXIy MjA0NzE4Mw==