Quick start, what to expect?

Shortcut to the US Stock Market

When a company agrees to merge with an American company and continues to plan to list on the US stock exchange, this is essentially a shortcut to bring shares to the US stock market.

Listing through a SPAC (Special Purpose Acquiring Company) is a special method that can help businesses shorten the time to list on the US stock exchange. A SPAC is essentially a shell company (blank check), with no production or business activities.

SPACs are pre-listed on major stock exchanges, formed by a group of investors to raise capital and then seek investment opportunities. After finding an investment opportunity, the SPAC will merge with the acquiring company in an initial public offering (IPO) and then list under the new company's ticker.

Listing through a SPAC can be understood as a form of "back door".

Listing shares on the US stock market is the goal of many Asian billionaires. (Photo: FX)

Previously, it was quite easy to list through SPACs. According to Bloomberg, in the first few months of 2021, there were hundreds of listings through SPACs, worth a total of hundreds of billions of dollars.

Then, the US Securities and Exchange Commission (SEC) tightened regulations, making it harder to list through SPACs.

However, this is still the easiest way to list stocks on the US stock market that many billionaires in the world , including in Asia, do, instead of having to meet a series of strict conditions.

In Vietnam, over the past decade, international listing plans of Vietnamese enterprises have not been successful, with names such as Vinamilk, FLC Group, VietJet , and Bamboo Airways recently.

Under current regulations, direct listing on the Nasdaq or NYSE requires very strict standards on financial indicators and market liquidity.

For example, to be listed on the NYSE, a company needs to have 2,200 shareholders, 1.1 million public shares. Minimum market capitalization is 100 million USD; minimum share price is 4 USD; information is disclosed in English. The time to complete legal procedures and meet the conditions set by the US is very long.

Waiting for the breakout

A successful listing abroad, especially in the US, is considered a historic opportunity for an Asian company. Previously, investors witnessed Alibaba, Sohu... "turning dragons" into global companies after listing internationally. Listing internationally opens the door to unlimited capital raising for any company, creating conditions for future breakthroughs.

Domestically, raising a few billion USD is very difficult, because this amount is too large compared to the small scale of the Vietnamese stock market. However, this is a very small number in international markets such as the New York Stock Exchange in the US.

Another thing worth noting is that international investors, large investment funds on Wall Street, or even in Singapore, pay more attention to the prospects of the business and the breakthrough of the project. Startups can lose, even lose a lot, but as long as they have prospects. Billions or tens of billions of dollars can be poured in, as in the case of Uber, Grab or Tesla of billionaire Elon Musk. A business can break through quickly thanks to the huge capital resources of thousands of billions of dollars that are always available in the international financial market.

Listing on the international market brings great brand advantages. It helps promote the products and services of the enterprise not only in the home country but also globally. As in the case of VinFast , if successfully listed in the US, the Vietnamese car and electric vehicle brand will become famous on a world scale.

Listing shares on the stock exchange also helps Vietnamese businesses standardize their governance, become more transparent, and integrate more deeply with the world. Cheap capital is also something that many businesses aim for.

However, at this time, going public internationally, even through SPAC, is no longer easy due to the less vibrant international stock market and unstable world financial market.

Recently, investment organizations have been very careful when pouring money into new startups, especially listed companies through SPACs. In addition, interest rates in international markets such as the US and Europe have risen to their highest levels in decades.

When a SPAC’s board of directors approves a merger with a company seeking to go public in the US, it still needs regulatory and shareholder approval. The outcome remains to be seen, as a SPAC’s board of directors typically does not hold a large stake. Dozens of fund managers, institutions, brokers, etc. will decide whether to approve the merger.

The issuance rate of the enterprise when IPO is also a matter of concern, it can be 5-10% but it can also be lower. The actual amount of money raised is important. After that, how the enterprise continues to raise capital is a problem for the future. Success or failure will depend entirely on the internal strength of the project.

High listing and capital raising costs are also concerns for many businesses.

Historically, a successful Vietnamese company listed on the international market was Cavico (listed on Nasdaq). The company was later delisted in 2011 due to information disclosure violations.

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