VinFast to spin off assets in US$1.5bil deal with founder
HANOI: VinFast Auto Ltd is poised to raise about US$1.5 billion by selling certain research and development assets to its founder, a move that will help shore up its finances as it plans an ambitious expansion.
The Vietnamese electric vehicle maker announced a plan to spin off part of its R&D unit to a newly formed company, known as Novatech Research and Development SJC, according to a filing made to the US Securities and Exchange Commission on Thursday.
Novatech will hold assets related to costs of completed research and development projects. After the creation of the new entity, VinFast will sell all of its shares in Novatech to its founder and Chief Executive Officer Pham Nhat Vuong for about 39.8 trillion dong ($1.5 billion), according to the statement.
"This move addresses funding requirements for operations and expansion as the company continues to report losses,' according to Ken Foong, an analyst with Bloomberg Intelligence.
Vuong, who is Vietnam's richest man with a $11.1 billion fortune according to the Bloomberg Billionaires Index, has pumped more than $2 billion of his own money into VinFast and has said he's willing to support the company until his cash runs out.
"The plan highlights the chairman's ongoing support for VinFast - complementing the grants he's made since 2023,' said Hong Luu, a senior manager of the research department at Vietcap Securities.
"Meanwhile VinFast's operations will remain unchanged,' she said.
VinFast said in the statement that the transaction "reflects a further effort by the founder to facilitate VinFast's long-term growth.'
VinFast is racing to establish a foothold in price-sensitive Asia amid intense competition and ongoing losses in its international business. It inaugurated a factory in the Indian state of Tamil Nadu earlier this month which will have an initial production capacity of 50,000 vehicles a year. It expects to open a plant in Indonesia by October. The company posted a loss of $3.2 billion last year.
Novatech will be carved out from VinFast Trading and Production JSC, or VFTP, and will initially remain a direct subsidiary of VinFast, with the EV maker holding about 38% stake, according to the statement.
The new company will have a charter capital of about 105.8 trillion dong and Vingroup JSC will own a roughly 62.3% stake, according to a separate statement on Vingroup's website.
VFTP will remain a direct subsidiary of VinFast and continue to operate its core EV manufacturing business in Vietnam and conduct future research and development on new products and technologies, according to the filing.
Shares of VinFast fell 2.3% to close at $3.46 per share on Thursday trading in the US. - Bloomberg
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