Drew Bernstein
Vietnam’s capital markets, long considered a closed and relatively insular environment, are beginning to open up as a new generation of ambitious companies emerges. Despite recent challenges, including a year-long freeze on new IPOs, controversies in the bond markets, and a 30% drop in its domestic stock index since 2021, Vietnam is home to companies with the potential to disrupt global markets. As the country recovers from the COVID-19 pandemic, with an impressive 8% GDP growth in 2022, Vietnam is now positioning itself as a key player in the global capital markets.
VinFast: Vietnam’s Bold Move into the EV Market
Leading the charge is VinFast, an electric vehicle (EV) company that has made headlines with its bold ambitions. As part of Vietnam’s largest conglomerate, Vingroup, VinFast has filed for a $1 billion IPO on NASDAQ. The company aims to compete directly with industry giant Tesla by offering lower-cost, high-performance electric SUVs. VinFast’s strategy is not just about producing vehicles; it’s about leveraging Vietnam’s manufacturing cost advantages and avoiding the tariffs that have hampered Chinese EV manufacturers in the U.S. market.
VinFast’s rapid development has been nothing short of remarkable. In just 18 months, the company developed and manufactured its first two EV models, the VF8 and VF9. With nearly 58,000 pre-orders and about a thousand vehicles already shipped to the U.S., VinFast is positioning itself as a serious competitor in the global EV market. The company’s existing facilities in Vietnam have a production capacity of 300,000 vehicles per year, and plans are underway to build a new factory in North Carolina, which could add another 150,000 vehicles annually.
However, VinFast’s success will depend on its ability to win over U.S. and European buyers. With only 32% of Vietnam’s population owning cars, the domestic market may not be sufficient to sustain the company’s ambitious growth plans. This IPO is being closely watched by both international investors and local companies, as it could set a precedent for future Vietnamese firms seeking to enter the global capital markets.
VNG Corporation: A Digital Powerhouse Ready for the Global Stage
Another Vietnamese company making waves is VNG Corporation, which is rumored to be planning a U.S. IPO in 2023. VNG owns Zalo, a messaging and social media app used by 75% of Vietnam’s population. The company has also introduced ZaloPay, a payment app designed to replicate the success of Tencent’s WeChat in China, which serves as a hub for payments, loans, insurance, and other essential transactions for Vietnamese consumers.
In addition to its dominance in digital communications, VNG has a strong presence in online gaming, media, and music streaming. As these assets continue to scale and generate profits, VNG is expected to become an attractive option for overseas investors looking to tap into Vietnam’s burgeoning digital economy.
Be Group: Challenging the Status Quo in Ride-Hailing and Digital Banking
Be Group, the No. 2 ride-hailing app in Vietnam, is another rising star. The company is steadily gaining market share from Southeast Asia’s super-app Grab in both ride-hailing and food delivery services. Under the leadership of CEO Vu Hoang Yen, Be Group is leveraging its status as a local champion to integrate ride-hailing with public transportation and airline tickets, creating a comprehensive mobility dataset for Vietnamese consumers.
Be Group also operates Cake, a digital bank that offers instant credit card issuance, loans, term deposits, and other financial products in partnership with VP Bank, one of Vietnam’s largest private banks. While Be Group may still be a few years away from going public, it exemplifies the potential of homegrown digital champions in Vietnam’s rapidly evolving economy.
The Vietnam Venture Summit: Showcasing Innovation and Potential
The Vietnam Venture Summit, hosted by Golden Gate Ventures and Vietnam’s Ministry of Planning and Investment, recently highlighted the energy and innovation of the country’s next generation of entrepreneurs. Startups ranging from genetic-based medicine and SaaS platforms to fintech and consumer brands are tapping into Vietnam’s rich pool of scientific and engineering talent. These startups are beginning to attract significant funding from global private equity firms, signaling growing international interest in Vietnam’s emerging companies.
The Path to Global IPOs
For Vietnam to realize its potential as a breeding ground for global champions, several key challenges must be addressed. First, the Vietnamese government needs to establish clear guidelines and an efficient process for approving overseas listings. Currently, any overseas IPO requires approval from the Ministry of Planning and Investment, a process that lacks transparency. To attract foreign capital and develop world-class companies, the government must provide a clear roadmap and a timely path to receive clearance.
Second, Vietnamese entrepreneurs must adapt to global accounting and governance standards. Many large conglomerates in Vietnam have complex structures, with multiple interlocking entities that create conflicts of interest and related-party transactions. The older generation of business leaders, often educated in Russia or domestically, may struggle to meet the transparency requirements necessary for listing overseas.
However, the younger generation of Vietnamese entrepreneurs is well-educated, globally minded, and digitally savvy. As their companies transition from startups to growth companies, they will drive significant changes in the economy and business culture. While investing in Vietnam may currently be a challenge, the opportunities are immense, and the transformation could happen faster than expected.
Vietnam’s Future in Global Capital Markets
As Southeast Asia’s capital markets expand, Vietnam is positioning itself as a key player, with emerging companies poised for global IPOs. With favorable growth driven by demographics, urbanization, and a stable government focused on economic development, Vietnam’s rise in the global capital markets is not just a possibility but an impending reality.
Vietnam’s next generation of companies benefits from significant tailwinds that are likely to drive a favorable growth environment over the next decade. The country’s low labor costs, quality infrastructure, and high levels of technical education make it a desirable location for multinational corporations looking to diversify their supply chains and for Chinese entrepreneurs seeking a manufacturing base insulated from tariffs and geopolitical risks. Vietnam’s government is stable, focused on economic development, and views the U.S. as a useful counterweight to its overbearing northern neighbor.
As Vietnam continues to develop and refine its approach to global capital markets, it has the potential to become a breeding ground for national champions and growth stocks that will catch the attention of international investors. The opportunities are immense, and the transformation of Vietnam’s economy and capital markets may happen in the blink of an eye.
