In the heart of Vietnam's burgeoning economic landscape, unfolds a remarkable tale of innovation, determination, and international triumph. VinFast, a subsidiary of Vingroup and Vietnam's largest electric vehicle manufacturer, has recently etched its presence on the Nasdaq, boasting a market capitalization exceeding 23 billion USD.

The resonating sound of the bell at Nasdaq, signifying its official listing on the world's most substantial capital market, stands as a historic milestone in VinFast's trajectory. This achievement not only ushers in novel prospects for VinFast to access international capital markets, thus propelling its robust future development, but also serves as a pioneering emblem for Vietnamese brands venturing across boundaries.

The odyssey of VinFast onto the global canvas

Emerged in 2017, VinFast swiftly ascended as Vietnam's premier electric vehicle (EV) manufacturer. Orchestrating a comprehensive EV ecosystem encompassing SUVs, scooters, and buses, VinFast's influence stretched from Vietnam to North America and, soon, Europe. The state-of-the-art automobile facility in Hai Phong, boasting an impressive automation rate of 90%, coupled with an annual production capacity of up to 300,000 vehicles, exemplifies its unwavering commitment to cutting-edge technology and efficiency.

By the close of 2022, VinFast unveiled its filing of a registration application under Form F-1 with the US Securities Exchange Commission (SEC) for an initial public offering (IPO).

However, in early June 2023, VinFast made a strategic pivot by retracting its previously submitted IPO application from December 2022 and opted to pursue a new avenue by merging with Black Spade Company for its US listing endeavors. This transition underscores a procedural shift in VinFast's roadmap towards listing in the US market, while reinforcing the brand's adaptive approach to strategic growth.

In the middle of May 2023, the strategic merger between VinFast and Black Spade Acquisition Co (traded as BSAQ on NYSE) was officially announced. Following this transaction, VinFast commanded a valuation surpassing 23 billion USD, fortified by its intent to debut on the US stock exchange.

According to experts, this entails a distinct listing method known as a SPAC business, undertaken through Black Spade. This echoes a growing trend among Asian startups seeking US stock market presence. (https://michaelpalance.com) For instance, Grab Holdings opted to amalgamate with Altimeter Growth, culminating in GRAB shares being traded on the Nasdaq stock exchange in December 2021. This contrasts with traditional IPOs, where companies issue shares to the public before stock exchange listing.

Unlike traditional IPOs, the SPAC route involves merging with a SPAC business and subsequently converting SPAC-listed shares into the company's own shares. This expedited process can be accomplished within a few months, considerably shorter than the conventional half-year IPO registration cycle with the SEC.

On August 15, 2023, the resonant sound of VinFast's launch bell reverberated across the US stock exchange Nasdaq Global Select Market, solidifying its status as a publicly listed company. With a market capitalization exceeding 23 billion USD and the trading code VFS, this significant event immediately followed VinFast's successful amalgamation with Black Spade on August 14, 2023.

Decoding Vinfast's SPAC choice 

The dichotomy between IPOs and SPAC listings represents divergent pathways toward the same objective.

Notably, a backdoor listing involves the merger of a non-public enterprise with a publicly-listed entity, circumventing the necessity for an initial public offering. This approach proves viable when timing, conditions, or readiness for an IPO are incongruent. Through this merger, the existing listed entity incorporates the non-public company, intertwining their assets and operations. Shareholders of the listed company receive shares in proportion to the agreed-upon ratio, facilitating the transition.

Evidently, such a stratagem diverges from the prevailing IPO-centered discourse in Vietnam. Hence, strategic clarity must precede corporate planning, as each trajectory presents distinct merits and drawbacks. Primarily, the variance lies in the capital infusion; an IPO typically injects immediate funds via share issuance, while SPAC listings necessitate subsequent fund-raising initiatives to maintain financial momentum.

Furthermore, the temporal and procedural disparities favor the SPAC approach, offering shorter  timelines and higher likelihood of success, albeit demanding robust investment in maintaining investor relations and financial transparency.

To encapsulate, SPACs surmount several impediments intrinsic to traditional IPOs, including procedural intricacies, cost factors, and temporal concerns. These factors collectively shape a more favorable landscape for companies eyeing the stock market for capital growth.

New way of capital generation for Vietnamese ventures

In the wake of VinFast's resounding success, the landscape of capital raising for Vietnamese ventures is undergoing a paradigm shift. As enterprises in Vietnam explore avenues to scale and innovate, the realm of capital acquisition is no longer a conventional hurdle, but an opportunity to redefine norms.

The journey of VinFast underscores the critical role that SPACs can play in enabling Vietnamese startups to access international markets. While traditional IPOs remain a hallmark of corporate advancement, the unique attributes of SPAC listings present an attractive alternative, replete with swifter timelines and streamlined procedures. The ability to sidestep the prolonged IPO process and the potential to garner immediate attention from investors is an invaluable proposition for startups that seek agility without compromising on their growth trajectory.

Loship, a burgeoning Vietnamese freight forwarding enterprise, sets its sights on a 2024 listing on the New York Stock Exchange (NYSE), contingent on achieving profitability. This impending IPO holds the potential to galvanize Loship's enduring expansion.

However, it cannot be denied that venturing into the global market poses distinct challenges, primarily stemming from the unfamiliarity of Southeast Asian businesses among global investors. This hurdle calls for alternative capital procurement strategies, with SPACs emerging as a viable conduit. Nguyen Hoang Trung, CEO and Co-founder of Loship, reinforces the pragmatic appeal of SPACs for Vietnamese startups like his own.

Likewise, VNG Joint Stock Company contemplates an NYSE listing through a SPAC, projecting a valuation ranging from 2 to 3 billion USD.

The strategic adoption of SPACs by companies like VinFast can serve as an inspiration for others to explore this route. While the journey of each company is unique, the precedent set by these pioneers demonstrates that innovation is not limited to product design or technology—it extends to the very core of business models, financial strategies, and expansion plans.

The evolution of capital raising in Vietnam's startup landscape is underway, and VinFast's listing exemplifies a new era of global engagement in this regard. This era invites Vietnamese entrepreneurs to reimagine their trajectories, embrace novel strategies, and march forward with unwavering confidence in their vision.

As the Vietnamese startup ecosystem continues to mature, the lessons from VinFast's strategic choices resonate loudly: progress is never linear, and innovation extends far beyond products. It is a journey marked by resilience, adaptability, and the audacity to challenge conventions.

In the end, it's not solely about capital; it's about the transformational power that capital can effectuate. It's about scaling aspirations, expanding reach, and making indelible marks on the global stage. With the right blend of innovation, strategic vision, and determination, Vietnamese startups can carve their narratives of success, much like VinFast has done, and propel the nation's entrepreneurial spirit into a future unbound by borders.

Key Considerations for Companies Seeking SPAC Listings

For companies in Vietnam or elsewhere considering SPAC listings, certain key factors merit attention:

Final thoughts 

In retrospect, VinFast's awe-inspiring journey to the pinnacle of the US stock market is symbolic of Vietnam's growing presence in global business arenas. 

In closing, the VinFast saga resounds as a testament to innovation, adaptability, and the bold pursuit of success. This historic endeavor illuminates a transformative path for Vietnamese businesses, reflecting the maturing landscape of global entrepreneurship. To join this evolution, explore the possibilities and chart your course to international prominence.Unlock the potential of global expansion with expert guidance. Contact us at Viettonkin today to discuss the possibility of leveraging SPAC to bring your company to the global market.

In the dynamic landscape of investment and corporate finance, the emergence of Special Purpose Acquisition Companies (SPACs) has introduced a transformative approach for companies to embark on their journey into the public market. This thorough analysis delves into the intricate realm of SPAC listing, offering valuable insights for investors. By delving into the definition, purpose, benefits, and risks of SPAC listing, this blog aims to provide readers with a comprehensive understanding of this distinctive method for capitalization and market entry. 

Definition of SPAC

SPAC stands for special purpose acquisition company. It is a type of shell company that has no operations or assets, except for the money it raises from investors through an IPO. The purpose of a SPAC is to use the proceeds from the IPO to merge with or acquire a private company, usually within a specified time frame (typically two years). The private company then becomes public as a result of the merger or acquisition, and the SPAC shareholders receive shares in the new entity. SPACs trace their origins to the 1990s but gained significant popularity in the 2000s as a more streamlined and cost-effective alternative to traditional IPOs. In 2020, SPAC activity surged dramatically, with 248 SPAC IPOs raising an unprecedented $83.3 billion. This record-breaking year accounted for over half of all US IPOs and saw notable companies choosing the SPAC route to go public, solidifying the growing significance of this medium.

The purpose of SPAC listing

The purpose of SPAC listing includes:

• Providing an alternative pathway for private companies to go public, bypassing the complexities of traditional IPOs.
• Avoiding the lengthy and resource-intensive process of conventional IPOs, which involves tasks such as financial statement preparation, regulatory documentation, underwriter selection, roadshow presentations, and share pricing.
• Mitigating exposure to market fluctuations and valuation risks, reducing the potential for significant deviations between the filing and trading periods.
• Streamlining and accelerating the journey to the public market, enabling SPACs to raise funds in a matter of weeks or months.
• Directing funds toward identifying and negotiating with a suitable target company.
• Empowering the target company with greater control, certainty, and the ability to establish a favorable valuation.
• Minimizing dilution and associated fees, thus maximizing the financial benefits of going public.

Benefits of SPAC listing

SPAC listing holds a multitude of advantages for both SPAC sponsors and target companies:

For SPAC sponsors

• Lucrative Returns: Successful merger or acquisition completion translates into substantial returns, with SPAC sponsors typically receiving 20% of shares in the newly formed entity as compensation.
• Expertise and Prestige: Renowned business leaders and investors who lead SPACs leverage their expertise and credibility to attract investors and potential target companies.
• Customizable Deals: SPAC sponsors enjoy a heightened level of flexibility in structuring deals with target companies, accommodating the specific needs and preferences of both parties.

For target companies

• Swift Access to Capital: SPAC listing expedites capital market entry, a process that can conclude in as little as three to six months, in stark contrast to the longer timeline of traditional IPOs.
• Simplified Process: By eliminating arduous procedures like financial statement preparation, regulatory filings, underwriter engagements, and share pricing, SPAC listing offers a streamlined and predictable route to going public.
• Capital Injection: SPACs raise capital through their IPOs with the primary purpose of acquiring a target company. This capital infusion can provide target companies with funds for growth, expansion, research and development, or other strategic initiatives.
• Control Over Valuation: Target companies have a greater degree of control over the valuation and deal terms in SPAC transactions. This allows them to negotiate terms that are more favorable compared to traditional IPOs, where market conditions can significantly impact pricing.
• Strategic Partnerships: Target companies possess the autonomy to choose compatible SPAC partners and establish equitable valuations that align with their present and future performance.
• Mitigated Market Volatility Risk: SPAC transactions can provide some protection against market volatility. Unlike traditional IPOs, where market conditions at the time of pricing can significantly impact the offering price, SPACs often negotiate deal terms in advance.
• Certainty of Closing: Once a SPAC announces its merger with a target company, the transaction is typically more certain to close compared to traditional IPOs, where the success of the offering depends on market demand and investor sentiment.
• Increased Visibility: Going public through a SPAC merger can increase a target company's visibility in the market and among potential investors. This increased exposure can be beneficial for brand recognition and attracting new stakeholders.
• Alternative Exit Strategy: For private companies seeking to go public, SPACs offer an alternative exit strategy to traditional IPOs or mergers and acquisitions (M&A). This flexibility can be valuable for companies exploring different options.
• Liquidity for Existing Shareholders: Existing shareholders of the target company, including founders and early investors, can potentially achieve liquidity through a SPAC merger.

Risks of SPAC listing

SPAC listing also involves some risks and challenges for both the SPAC sponsors and the target companies. Some of these risks are:

For SPAC sponsors

• Time Constraint and Competition: The limited two-year timeframe for SPAC sponsors to secure a merger or acquisition deal necessitates a competitive search for suitable target companies, potentially leading to challenging negotiations and higher competition.
• Regulatory Compliance: Adherence to stringent Securities and Exchange Commission (SEC) regulations and disclosure requirements is vital, with non-compliance exposing sponsors to legal liability and reputational harm.
• Shareholder Engagement: SPAC shareholders' approval is a critical juncture, with the ability to vote on proposed deals, possibly leading to dissatisfaction and litigation.

For target companies

• Valuation and Dilution Risks: SPAC mergers may result in target companies receiving lower valuations than anticipated or experiencing dilution due to additional share issuance.
• Integration and Operational Challenges: Post-merger integration of business processes, cultures, and systems can pose obstacles to the target company's sustained growth and competitiveness.
• Regulatory Scrutiny and Reputation Management: Public listing brings forth regulatory responsibilities, demanding transparency, accountability, and governance. Missteps can lead to regulatory backlash and negative public perception.

Mitigating Risks of SPAC Listing

While SPAC listings offer several advantages, it's essential for target companies to be aware of potential risks and take measures to mitigate them.

• Negotiate Terms: Target companies should negotiate deal terms that are favorable and protect their interests. This includes setting a fair valuation, defining performance-based milestones, and establishing appropriate earn-out provisions.
• Post-Merger Performance: Setting clear post-merger performance goals and strategies is important to ensure that the target company continues to thrive as a publicly traded entity.
• Compliance: Maintaining compliance with regulatory requirements is non-negotiable. Companies must adhere to reporting obligations and governance standards to avoid legal and financial repercussions.

Final Thoughts

In conclusion, the universe of SPAC listing offers a compelling avenue for private companies to navigate the complexities of public market entry. As the investment landscape evolves, understanding the multifaceted aspects of SPAC listing is paramount for investors and business decision makers to make informed choices. This comprehensive analysis has delved into the definition, historical backdrop, purpose, advantages, and risks of SPAC listing, equipping readers with an in-depth comprehension of this innovative vehicle for capitalization and market presence.

If you wish to delve deeper into the world of SPACs or require tailored insights for your business, our team at Viettonkin Consulting is here to help. With a track record of providing strategic advice and in-depth analysis, we're committed to helping you navigate the intricacies of SPAC listing and make well-informed decisions for your company's growth and success.

Consult with us today and schedule a personalized 1-hour session for SPAC listing. Let's turn your possibilities into realities together.