VNG has carved its path as a leading tech juggernaut in Vietnam, earning acclaim for its innovations in online gaming, communications & media, fintech, and digital business. What brings us here today is an exciting moment in VNG's history - the company's recent filing for an Initial Public Offering (IPO). This article peels back the layers of VNG's journey, shedding light on the implications of this IPO for both the company and the broader Vietnamese tech landscape. Join us as we navigate through the past, present, and future of VNG, uncovering the transformative potential of this IPO for one of Vietnam's foremost tech giants, and its resonance with recent developments such as VinFast's foray into the electric vehicle market.

VNG's Journey to Prominence

The story of VNG's ascent to prominence in Vietnam's tech industry is a compelling narrative backed by a series of milestones and strategic moves. Founded in 2004 and headquartered in Ho Chi Minh City, VNG quickly positioned itself as a tech leader. With its extensive business portfolio, VNG's diversified approach has contributed significantly to its status as Vietnam's first unicorn - a startup valued at 1 billion USD or more.

Revolutionizing the Gaming Landscape

A pivotal aspect of VNG's trajectory has been its innovative strides in the realm of online gaming. From its inception, the company astutely identified the burgeoning interest in gaming within Vietnam and ventured into this arena with the groundbreaking success of "Swordsman Online," a game that swiftly propelled VNG to the forefront of the industry. Fast forward to 2023, and VNG has set an ambitious revenue target of US$393.3 million for this year, reflecting a substantial 19% surge compared to its 2022 earnings. Furthermore, VNG's influence extends beyond borders, with nine game studios strategically positioned in key locations such as Thailand, Singapore, Malaysia, Taipei, and China, reaffirming its unwavering commitment to delivering captivating gaming experiences to a global audience.

The Triumph of Zalo and ZingMP3

Another standout achievement was the development and launch of Zalo, a messaging application that took Vietnam by storm. With more than 75 million monthly active users, Zalo became a dominant force in the Vietnamese tech scene, rivaling international giants. VNG's foresight in recognizing the potential for such a platform among Vietnamese users paid off handsomely.

In the fintech realm, VNG made strides with ZaloPay - an e-wallet that has exhibited rapid growth in Vietnam's digital payments landscape. As online transactions surged, VNG capitalized on the trend by providing users with a secure and convenient payment solution.

Meanwhile, VNG's ZingMP3 emerged as a leading online music platform in Vietnam, boasting more than 28 million monthly active users. The platform not only served as a source of entertainment but also showcased VNG's commitment to diversifying its offerings.

These achievements underscore VNG's remarkable journey to prominence in Vietnam's tech sector. Its ability to navigate changing trends and pioneer innovative solutions has not only set it apart but also positioned it as a key player in the dynamic tech landscape of Vietnam. This journey lays the foundation for a deeper exploration of VNG's recent milestone - a recently filed IPO that holds the potential to redefine the company's trajectory and influence in the tech industry.

VNG's IPO - A Game Changer

VNG's recently filed IPO marks a pivotal moment in the company's history, underlining its commitment to growth and innovation. This transformative step has been carefully planned, reflecting VNG's strategic vision and its significance within the tech industry.

A Bold Step onto the Global Stage

In 2017, VNG set its sights on the global stage, signing a preliminary agreement with Nasdaq to explore the possibility of listing in the United States. Fast forward to August 23, 2023, when VNG submitted an IPO application in New York through ListCo VNG Limited, which is listed on the NASDAQ Global Select market under the trading code VNZ. This bold move demonstrates VNG's readiness to embrace international financial markets and capitalize on new opportunities.

The IPO process entails offering more than 21,687,082 Class A shares to the public. Notably, investors acquiring Class A shares through the IPO will enjoy 15.8% of economic benefits at ListCo VNG Limited and 7.7% of voting rights at ListCo VNG Limited. This structure reflects VNG's commitment to inclusivity and engaging a wide spectrum of stakeholders in its journey.

VNG's IPO is expected to be a resounding success, potentially valuing ListCo VNG Limited at an impressive 2-3 billion USD and mobilizing around 300 million USD. While the IPO price has not been determined, the offering holds great promise for both VNG and its investors.

Navigating the Complexity of Growth

However, the road to IPO success comes with its intricacies. The underwriters for this monumental IPO include Citigroup, Morgan Stanley, UBS, and Bank of America, underscoring the global interest in VNG's growth story.

One of the distinctive aspects of VNG's IPO journey is its commitment to balance economic interests and voting rights. Initial foreign investors, including Tencent, GIC, Seletar Investment Pte Ltd, and Ant Group, will collectively hold 84.2% of economic interests in ListCo VNG Limited and 41.3% of voting rights. This measured approach ensures that VNG maintains its strategic direction while benefiting from international expertise and resources.

Furthermore, ListCo VNG Limited will issue an additional 7.5 million shares to Tencent following the IPO's successful completion. Consequently, Tencent and Ant Group will own nearly 73 million Class A shares, equivalent to 53.1% of ListCo VNG Limited's economic interests. Despite this substantial economic stake, Tencent and Ant Group will hold 26% of voting rights. With a voting share of 51%, VNG's founders, Le Hong Minh and Vuong Quang Khai, continue to be the key voices in shaping the company's future and pivotal decisions.

VNG's Future Outlook

With a recent filing for its Initial Public Offering (IPO), VNG is standing on the cusp of a future brimming with unprecedented growth and innovation. The IPO serves as a strategic maneuver that strategically places the company for expansion while unlocking a realm of fresh opportunities.

Unveiling New Geographical Frontiers

One paramount facet of VNG's post-IPO outlook revolves around its potential for geographical expansion. Bolstered by augmented financial resources, the company is primed to venture into new markets and regions, solidifying its global footprint. This expansion entails the introduction of VNG's diverse range of products and services to a wider audience, diversifying its revenue streams and mitigating the risks associated with market concentration.

Furthermore, the infusion of capital stemming from the IPO empowers VNG to spearhead innovation and foster cutting-edge technologies. In an ever-evolving technological landscape, VNG's investments in research and development can yield groundbreaking solutions and platforms, tailor-made to meet evolving consumer demands. This commitment to innovation not only enhances VNG's competitive edge but also contributes to the broader tech ecosystem's advancement.

VNG's Role in Elevating the Tech Ecosystem

Beyond its individual growth, VNG's post-IPO journey plays a pivotal role in the ongoing development of Vietnam's tech ecosystem. As a trailblazing tech firm, VNG sets the benchmark for innovation and entrepreneurship within the country. Its resounding success stands as a beacon of inspiration for startups and emerging tech entities, nurturing a culture of innovation and ambition throughout Vietnam.

Looking ahead, VNG is strategically poised to continue shaping the tech industry in Vietnam and beyond. Its trajectory is characterized by ceaseless growth, relentless innovation, and substantial contributions to the development of the tech ecosystem within its home country. As VNG embarks on its next chapter, the tech world watches with eager anticipation, ready to witness the unfolding of the next remarkable chapter in this extraordinary success story.

Final Thoughts

VNG's Initial Public Offering (IPO) marks a watershed moment in Vietnam’s tech industry. With a rich history and a diverse portfolio of online games, communications, fintech, and digital business ventures, VNG has solidified its position as a tech giant in Vietnam. The IPO signifies not only a significant financial milestone but also a testament to VNG's pivotal role in shaping the tech landscape of the nation.

As VNG embarks on its journey post-IPO, the possibilities are endless. With the backing of investors and newfound resources, the company is poised for remarkable growth and innovation, paving the way for a brighter future.

For those looking to explore the investment opportunities arising from VNG's IPO and navigate the dynamic Vietnamese tech sector, Viettonkin stands as a trusted partner with expertise and insights. Connect with us for guidance and support in seizing the exciting prospects offered by VNG and the broader tech landscape in Vietnam. Your journey towards tech investment success starts here.

The wake of the Covid-19 pandemic and the swift change in the behaviors of consumers have pushed the banking sector in Vietnam towards digital transformation. The post-Covid “new” normal has presented Vietnamese banks with challenges. To survive, they have to catch up with the digital trends; however, new opportunities are open to them and investors in this sector when digital banking seems promising to grow. 

Market potential

In Southeast Asia (SEA), digital sectors have experienced substantial growth, reaching 100 billion USD in 2020, expecting to surpass 300 billion USD in 2025. In the region, Vietnam currently ranks 3rd in attracting investment in companies operating on online platforms, including digital services and fintech. Besides, by 2025, Vietnam's digital economy will account for about one-fifth of GDP, which will increase by 7 - 16% by 2030, equivalent to about 28 - 62 billion USD, signaling the golden time to promote digital business. 

Customer behavior

In a recent survey by KPMG, in Asia–Pacific emerging markets, the share of consumers actively using digital banking increased sharply, rising 33 percentage points from 54% to 88% in a period of 5 years (2017- 2021). In contrast, the level of digital adoption among consumers in developed Asia–Pacific markets has remained stable at approximately 90%. The increase in active digital bank users is arguably higher in Vietnam compared with APAC - emerging and some APAC - developed markets, with the numbers rising by 41 percentage points to 82% in 2021 (KPMG, 2021). 

The population of Vietnam is currently more than 98 million people (General Statistics Office, 2021), of which 70% are in the adult age, and 72% own at least a smartphone which is equivalent to approximately 70 million people. This number of Vietnamese smartphone users ranks second in SEA, only behind Indonesia. Likewise, 67% of Gen Y users choose mobile as a common payment method, and 61% of them prefer opening an account online rather than going to the banks (MB Bank, 2021 quarterly report). Concurrently, 80% of Gen Z use digital banking on smartphones, becoming the generation that sets the pace for the future development of digital banking. Furthermore, as the population of Vietnam largely comprises the young generation, with the ability to quickly adapt to new technology and being tech-savvy, an increasing number of people have adopted digital financial services, which has presented a potential pool of customers for the growth of digital banking in Vietnam. The number of banking application users in Vietnam recorded a growth of 73% in the first 9 months of 2020, the highest rate in the entire region. However, digital banking penetration is still moderate, and Vietnam's digital financial services have a lot of room for development in the coming years.

In 2021, Vietnam record 8 million new digital users of which 97% are using online services, and 99% intend to keep doing so. Also in the report “Year in search” of Google, the search interest in “ ngân hàng online (online banking)”  and “mở thẻ online (open card online)” increase by over 58% and 76% respectively.  Rising searches in 2021 paint a picture of how the many newcomers have not only dipped their toes into the online world but also taken the plunge to integrate digital into their lifestyles. In the next five years, eight in 10 merchants anticipate more than half of their sales to come from online sources, 81% of them likely to increase their usage of digital payments in the next one to two years. 

This is a watershed moment for the bank to think about digital ways to be readier to respond to future changes that may lie ahead, while still keeping the customer at the center of what you do.

Collaborations with Fintech 

The survey on Fintech activities of financial companies globally in 2017 by KPMG shows that 81% of banks oriented cooperation models. According to the Global Fintech Report 2017 of Capgemini Information Technology Group (France), 77% of bank managers surveyed considered Fintech as a future cooperation partner.

In Vietnam, current fintech transactions are also based on collaboration with bank accounts. Therefore, the development of digital banking will have several advantages when integrating its products and services with Fintechs. In this way, fintech firms will help banks expand the reach of their digital financial products and services. In addition, capital resources are a challenge for all fintech companies. Especially when it comes to raising capital for credit activities and increasing transaction volume and consumer lending, only banks have the ability to perform as Fintechs are currently limited to low-volume transactions. Accordingly, banks can help fintech companies scale up the volume of their transactions substantially.

Conclusion

Ample opportunities are waiting for those who take risks. Yet, the investors should consider the legal framework in the digital banking sector. If you are interested in investing in the Vietnam digital banking sector, don't hesitate to contact our Vietonkin consultant team via email or contact page. Our professionals, who are insightful of the Vietnam market and legislation, can provide detailed advice on penetrating this potential market.