Vietnamese law firm YKVN and international counterpart Latham & Watkins have assisted carmaker VinFast in a merger and Nasdaq listing.
VinFast is a subsidiary of Vietnamese conglomerate Vingroup. Its listing on Nasdaq came in August through a merger with special purpose acquisition company Black Spade.
Following VinFast, Vietnamese internet company VNG filed for an IPO in the US. Vietnam retail company The CrownX, e-commerce platform Tiki and Bamboo Airways have expressed similar plans. However, achieving this is no simple feat.
In 2021, Vietnam-based loyalty and analytics platform Society Pass debuted on the Nasdaq. Hanoi-headquartered construction company Cavico did the same in 2008 but was delisted after three years.
“The current regulatory framework [in Vietnam] is not yet fully equipped to facilitate the direct listing of a company incorporated in Vietnam on an offshore exchange,” Ho Chi Minh City-based YKVN managing partner Truong Nhat Quang told Asia Business Law Journal.
“Several logistical challenges exist, including the need to address issues such as the fungibility of shares held domestically versus those held offshore, as well as the mechanics of distributing dividends to offshore shareholders.”
Truong said a formal agreement between Vietnam’s stock exchange and offshore counterparts such as the Nasdaq was required to enable a dual listing on both stock markets.
“Consequently, local companies seeking to list their Vietnamese businesses have been exploring alternative pathways,” said Truong. “One such viable alternative is to list the offshore entity that holds the Vietnamese business, [which was] the approach recently undertaken by VinFast with its Nasdaq listing.”
The reorganisation of VinFast Vietnam to establish VinFast Auto as an offshore holding entity in Singapore was a pioneering initiative. The complex process involved a series of rigorous Vietnamese regulatory procedures and approvals, including offshore investment clearance from the Ministry of Planning and Investment.
“These approvals were essential to enable Vingroup and Vietnam Investment Group, the controlling shareholders of VinFast Vietnam, to establish the offshore listing entity, VinFast Auto, in Singapore, with the capacity to hold 99.9% ownership in VinFast Vietnam,” said Truong.
After the IPO process, VinFast will be subject to ongoing compliance in the jurisdictions, such as Singapore or the US, where the company is listed. The automaker has imported about 2,100 electric vehicles (EVs) to the US.
Truong led a Ho Chi Minh City-based team comprising partner Nguyen Van Hai and counsel Ho Anh Tuyet. Meanwhile, Latham’s Singapore-based partners Sharon Lau and Stacey Wong, and Tokyo partner Noah Carr, led their company’s team assisted by Singapore-based associates Elisabeth Ong, Sirada Chayabunjonglerd, Esha Goel, Jeffy Katio and Huang Bijun.
The Vietnamese automobile industry is expected to continue its growth trajectory this year, with a projected compound annual growth rate of 25% between 2020 and 2025.
“The industry was traditionally dominated by foreign automakers; however, local brands such as VinFast have been gaining recognisable market share thanks to government support and investment in research and development,” said Truong.
The Vietnamese government has approved some preferential tax policies including special excise tax exemption and reduction for EVs, as well as a registration fee waiver for three years. Manufacturers of vehicles consuming electricity or renewable energy, vehicles with low fuel consumption, or vehicles with low or no emissions would benefit from a 10% corporate income tax, lower than the standard of 20%, as well as exemptions from land rental fees for 19 years.