A VinFast EV automotive on show on the New York Auto Present, April 13, 2022.
Scott Mlyn | CNBC
BEIJING — A brand new group of Asia-based corporations are considering preliminary public choices within the U.S., the place worldwide listings had been as soon as pushed principally by Chinese language startups.
Vietnam-based electrical automotive firm VinFast broke new floor with its U.S. listing in August, through its merger with the U.S.-listed particular function acquisition firm Black Spade Acquisition.
Whereas not strictly an IPO, the itemizing was quickly adopted by Vietnamese tech unicorn VNG’s submitting to checklist on the Nasdaq. VNG’s merchandise embody gaming, fintech and music streaming.
“Something like VinFast puts the [country] on the map,” stated Johan Annell, Beijing-based accomplice at ARC Group.
It sends a message that “despite capital controls, which I think is the major formal barrier for companies, it is possible for them to do IPOs,” he stated.
VNG famous in its prospectus that Vietnamese law prevents “foreign investors” from owning more than 49% of the capital used to ascertain an area firm working in gaming and sure different sectors. Consequently, VNG is a part of a reorganization which makes use of a Cayman Islands holding firm to checklist within the U.S., the submitting stated.
“Our corporate structure involves unique risks, has not been tested in any court and may be disallowed by Vietnamese regulatory authorities,” the submitting stated.
It is unclear when VNG will go public. However corporations that scour for potential IPO purchasers years upfront say they’re speaking to extra corporations in Vietnam and the encircling area.
As native corporations develop, “they are outgrowing the ability of those markets to provide the capital that they need,” stated Drew Bernstein, co-chairman of accounting agency MarcumAsia. “It’s still the very early stages of the game.”
Bernstein stated he attended investing conferences in Malaysia and Vietnam in late October, the place lots of the attendees had been the identical individuals who’d he’d met over the past 10 to fifteen years within the China-U.S. IPO circuit.
Because the fallout over Didi in the summertime of 2021, regulation and a tepid U.S. IPO market have stalled most Chinese language itemizing plans. Solely one of many 20 China-based corporations that listed within the U.S. this yr raised greater than $50 million, in keeping with Renaissance Capital.
Investor relations, capital markets advisory and monetary media relations agency The Blueshirt Group has additionally labored with many Chinese language corporations to checklist within the U.S.
However the agency’s managing director, Gary Dvorchak, stated Blueshirt organized a seminar in April with 20 to 30 Vietnamese-based corporations concerning the path to a U.S. IPO. Lots of the corporations had been in tech, reminiscent of funds, on-line video games and e-commerce, he stated.
“Just in contrast the rest of Asia there’s nothing in Thailand, some in Indonesia,” he stated. “So the fact that you see so many in Vietnam is really meaningful.”
A rising startup ecosystem
CNBC reached out to about two dozen startups with headquarters or a significant workplace in Vietnam to ask about their U.S. IPO plans. Most of those that responded indicated any itemizing was nonetheless a methods off, however famous speedy progress in native startups over the past 15 years.
“Capital available to Vietnamese startups has increased tremendously compared to 10 years ago,” stated Nguyen Nguyen, CEO of fintech startup Trusting Social, whose workplaces within the area embody Singapore and Vietnam.
He added the rising startup ecosystem has attracted many individuals of Vietnamese heritage to return to their dwelling nation, whereas home financial progress has elevated the market measurement for native gamers.
Vietnam’s gross home product surged 3.6 times on a per capita foundation between 2002 and 2022, to just about $3,700, in keeping with the World Financial institution.
ELSA, which makes use of synthetic intelligence to assist individuals study English, relies within the U.S. whereas co-founder and CEO Vu Van hails from Vietnam. She stated given the success of Southeast Asian ride-hailing firm Grab, extra Vietnamese corporations are beginning to look past the home market to regional enterprise.
For ELSA, “when we started the company our aspiration has always been a global business with a global footprint,” Van stated, including {that a} “U.S. IPO would help us with that global footprint.”
Out of 103 U.S. IPOs this yr, 10 had been from corporations based mostly in Southeast Asia — cut up between Singapore and Malaysia, in keeping with Renaissance Capital knowledge as of Nov. 29.
“It is unusual to see this many listings from Asian companies outside of China,” the agency stated. “However, none of these are of a significant size.”
George Chan, world IPO chief at EY, expects “a lot” of corporations from Southeast Asia will attain the IPO stage within the subsequent 12 to 18 months, and may also contemplate the Hong Kong alternate.
The pattern shouldn’t be changing Chinese language IPOs within the U.S., Bernstein stated, however moderately creating new alternatives. MarcumAsia is increasing its workplaces in Beijing, Tianjin, Guangzhou and Shanghai, and opened an workplace in Hong Kong this fall.
MarcumAsia opened an workplace in Singapore in Might 2022 and would not have plans for different workplaces in Southeast Asia proper now, he stated. “There haven’t been enough large deals done in the markets outside of China to give people the sense of security that they can get the deal done.”
Finally, world IPO markets have to get well earlier than any firm could make severe plans.
“There is definitely a very robust pipeline of companies from Southeast Asia who are evaluating the U.S. markets,” Bob McCooey, a vice chairman at Nasdaq, stated in a cellphone interview this fall. He famous that given market circumstances, many corporations are delaying their itemizing plans to the primary half of subsequent yr.
