Vietnamese businesses and the dream of cross-border IPOs

Many Southeast Asian companies are thriving and have the ability to go beyond their domestic boundaries to realize their cross-border IPO dreams.

Tiki - an e-commerce platform founded by Vietnamese people plans to IPO in the US in 2025. (Source: Investment Newspaper)

The arduous IPO roadmap

Investors around the world have recently seen and met a group of emerging Asian companies planning to go public in the US, where international listings were once driven mainly by Chinese startups.

Among them, only a few Indonesian companies have demand, while Thailand has no company. Therefore, the fact that many companies in Vietnam want to IPO is really meaningful for investors when they are looking for growing and reliable businesses to invest and make profit.

Most businesses established in Vietnam with regional and global ambitions aim to have an IPO in a major market, with the US and Singapore being their choices.

Of the 103 US IPOs this year as of November 29, 10 were from companies based in Southeast Asia, according to Renaissance Capital data.

In August 2023, Vietnam-based electric carmaker VinFast made waves when it listed in the US via a SPAC (special purpose acquisition company). In addition, Vietnamese tech unicorn VNG also filed to list on Nasdaq. VNG's products include games, financial technology, and music streaming.

Many companies from Southeast Asia are considering the US market for IPOs, but market conditions are delaying their listing plans to the first half of next year, according to Bob McCooey, vice president of Nasdaq.

Mr. Le Hong Minh, General Director of VNG, admitted that he was very worried about an IPO on the international market because it entailed significant risks. “However, that is what we believe in, because if we don’t do it, VNG cannot truly develop the company,” Mr. Minh said.

Tiki - an e-commerce platform co-founded by a group of Vietnamese people - also plans to conduct an IPO in the US in 2025. However, up to this point, Tiki has not made any new moves. Currently, Tiki is on the threshold of becoming a unicorn with a valuation of 832 million USD. Tiki has received an investment of 470 million USD, according to CrunchBase data. The most recent time, Tiki sold 10% of its shares to Shinhan Financial Group (Korea).

Currently, international investors are expecting the move of the new name, The CrownX, of Masan Group. Masan has the ambition to develop The CrownX retail platform into an integrated consumer service channel, based on the F&B platform, the Winmart retail system, the partnership with Techcombank, and the potential for M&A with other consumer brands.

At the 2023 Annual General Meeting of Shareholders, Mr. Danny Le, General Director of Masan, said that The CrownX's IPO could be implemented in 2024 or 2025, when market conditions are more favorable.

Up to now, Masan has successfully convinced many big names in the international financial market such as SK Group (Korea), Alibaba (China), Platinum Orchid (part of Abu Dhabi National Investment Fund), or SeaTown Master Fund (a subsidiary of Temasek Holdings)... to become strategic partners and together realize its ambition to reach new heights.

FPT Corporation also revealed that FPT Software may IPO to serve its ambition of becoming the leading chip manufacturer in the region. At the 2023 Annual General Meeting of Shareholders, Mr. Nguyen Van Khoa, General Director of FPT, said that the Group may spend hundreds of millions of USD on M&A to expand its coverage and establish alliances globally, especially in regions such as the US, Asia, Europe and Latin America.

However, in the short term, instead of listing shares to access the capital market, the Vietnamese technology giant has a strategy of "directly" attacking the US market with a launch pad of abundant resources after many years of accumulation.

In fact, after the listing of VinFast and Society Pass, investors still expect listing events of VNG, Tiki and The CrownX in the next 18 months.

"Bottleneck" of domestic IPO market

The fact that a number of companies of Vietnamese origin want to list on international markets is seen by investors as proof of Vietnam's steady growth.

Many investors are paying attention to quality companies with strong transformation strategies and high growth performance in Vietnam. This is a positive signal for Vietnam, which has a clear strategy for domestic and foreign markets.

However, VinFast's IPO was conducted by a company registered outside of Vietnam (specifically Singapore) via a SPAC on the US NASDAQ stock market. Therefore, this IPO is not included in the statistics of the State Securities Commission (SSC).

Domestically, the capital raising market through IPO has had a rather gloomy year. In the 10 months of 2023, 3 businesses completed IPOs, raising 7.1 million USD according to the announcement on the SSC information portal.

The low number of IPOs is mainly due to the tightening of IPO approval and listing processes, and higher net capital withdrawals from foreign investors due to global and local factors affecting market liquidity in 2023. These unfavorable conditions, along with the decline of the VN-Index since the first half of 2022, have forced companies wishing to IPO to delay their plans and wait for the right time to list.

Mr. Bui Van Trinh, leader in charge of assurance services, Deloitte Vietnam, said that although Vietnam's stock indexes will recover by the end of 2023, they are still far from the peaks in 2021 and early 2022. Meanwhile, the number of IPOs in Southeast Asia is relatively high in 2023. Indonesia emerged as the most vibrant market in the region, with 77 IPOs, raising $3.6 billion, accounting for half of the region's IPOs and 66% of the total IPO proceeds raised on the six exchanges.

This achievement has helped Indonesia have the 4th strongest stock exchange globally to date, behind only China, the US and the United Arab Emirates (UAE).

Southeast Asian companies are thriving and are able to go beyond their domestic borders to pursue cross-border IPOs. This is driven by a number of factors including expectations of premium valuations, improved liquidity, industry compatibility and investor familiarity with certain sectors. Global stock exchanges are paying more attention to Southeast Asian companies.

Southeast Asia is not the only region facing the challenge of maintaining a vibrant and attractive equity market. Globally, the number of IPOs and the amount raised have returned to pre-Covid-19 levels, driven by the trend of companies staying private longer, recently in response to the global macroeconomic environment and challenging interest rates, said Tay Hwee Ling, head of IPO services for Southeast Asia and Singapore at Deloitte.

“Companies considering going public may have some commercial objectives in mind. While regional stock exchanges may have devised various policies to attract listed companies, the direct impact of these policies on companies’ listing decisions is limited,” said Ms Tay Hwee Ling.

Accordingly, investors will determine how to allocate capital based on their strategy and how they view the market. Governments in the region recognize the value of attractive stock markets as part of the overall financial services ecosystem and must continuously adapt to changes in global capital markets.

Singapore is now almost a "paradise" for businesses in the region that want to IPO to raise capital, especially through the form of SPAC.

According to a representative of Deloitte Singapore, although the IPO market in Singapore seems quiet this year, there is an important point to note, which is the abundant financial capacity of Singapore companies, ready to explore opportunities for cross-border listings on global exchanges.

“Singapore has political stability and a solid legal environment, creating the premise to facilitate unprecedented capital flows, acting as a strategic bridge between the US and China, and is also the regional headquarters chosen by many funds and family office management companies,” a representative of Deloitte Singapore affirmed.

While for many companies, listing in the US is attractive due to its large investor base and higher liquidity, many companies may also choose to list in other regions, giving them better access to their main target markets.

Source: https://baoquocte.vn/doanh-nghiep-viet-va-giac-mo-ipo-xuyen-bien-gioi-255229.html