Vietnam's VinFast chairman gets $39bn richer as company shares surge 255%

Pham Nhat Vuong is now worth $44.3bn after VinFast debut

VinFast electric vehicles at a store in Los Angeles, California. Reuters

Its electric cars have been dogged by poor reviews and it’s on pace to make fewer sales this year than General Motors does in a week.

Yet that hasn’t stopped VinFast Auto from becoming the latest beneficiary of speculative fervour around newly minted Spac deals – many of which end up tumbling over the long-term.

The Vietnamese auto maker’s shares surged 255 per cent on Tuesday when it debuted on the Nasdaq Global Select Market, pushing the company’s market capitalisation above that of industry giants GM and Mercedes-Benz Group.

It added $39 billion to the net worth of chairman Pham Nhat Vuong, whose fortune now stands at $44.3 billion, according to the Bloomberg Billionaires Index.

It’s the latest example of a thinly traded company soaring on its debut after completing a merger with a special-purpose acquisition company.

Many have experienced eye-popping rallies that ended a few trading sessions after the merger closed, as traders look to make a quick profit on companies with limited shares – meaning the jump in Mr Vuong’s wealth may be short-lived.

De-Spacs – the term for firms that go public via a Spac merger – that have made their debut this year have seen a median slump of about 45 per cent, with 18 of them wiping out more than 70 per cent of their value, according to data compiled by Bloomberg.

Regulatory filings show Mr Vuong, Vietnam’s richest man, directly and indirectly controls 99 per cent of the company’s outstanding shares, mostly through his conglomerate, Vingroup.

That large stake limits the shares available for other investors to trade, meaning the stock is prone to large swings. The Bloomberg Billionaires index hasn’t previously included Vuong’s stake in the car maker, which he founded in 2017.

If VinFast can hold on to its gains, it will be in a somewhat unique position given the dismal performance of other electric car makers taken public via Spacs, including Lordstown Motors, Nikola and Faraday Future Intelligent Electric, all of which lost more than 90 per cent of their market value since their mergers.

VinFast, though, has been weighed down by operational problems.

In May, it recalled all the electric sport utility vehicles shipped to the US over a software malfunction and there have been some negative reviews. The company also cut some of its US workforce, sales have been modest and its net losses are widening.

“There have been some negative reviews,” VinFast chief executive Le Thi Thu Thuy told Bloomberg Television Tuesday.

“We take them very close to our heart, we reflect on the feedback from those reviews and we make our vehicles better.”

VinFast's pre-production VF 8 car at an event in Nha Trang, Vietnam. Holly Aguirre / The National

VinFast chief executive Le Thi Thu Thuy, left, speaks to VinGroup founder and chairman Pham Nhat Vuong at a company event in Nha Trang, Vietnam. Reuters

The VinFast VF 8 has options that feature leather interiors with room for five passengers. Holly Aguirre / The National

The interior of the VinFast VF 8. Holly Aguirre / The National

The VinFast VF 8 is expected to take a bite out of the US electric vehicle market. Holly Aguirre / The National

The VinFast VF 8 has room for the whole family. Photo: VinFast

The exterior of the VinFast VF 8. Photo: VinFast

The VF 8 will start at $40,700, making it quite competitive in the US electric vehicle market. Holly Aguirre / The National

VinFast accounts for 8.4 per cent of the Vietnamese car market, with plans to go all-electric. Holly Aguirre / The National

Test drivers gave the VinFast VF 8 two thumbs up. VinFast

The VinFast manufacturing centre in Haiphong, Vietnam. Holly Aguirre / The National

Workers assemble an electric car at the VinFast electric car plant in Haiphong, Vietnam. AFP

VinFast's factory in Haiphong, Vietnam. Reuters

A worker assembles an electric car battery. AFP

VinFast chief executive Le Thi Thu Thuy speaks to visitors during a tour of the company's factory, in Haiphong. Reuters

The VinFast VF 9 on display at the New York International Auto Show earlier this year. Getty Images / AFP

The VinFast booth at the 2022 New York International Auto Show. Reuters

The VinFast VF 9 on display at the New York International Auto Show. Getty Images / AFP

Nguyen Quoc Dung, Vietnam's ambassador to the US, Gina Raimondo, US Commerce Secretary, Jennifer Granholm, US Energy Secretary, Le Thi Thu Thuy, Vingroup Vice Chair and VinFast chief executive and US Representative David Price attend VinFast's presentation at the US Department of Energy in March. AP

The VinFast VF 9 electric vehicle at the Consumer Electronics Show in Las Vegas. Getty Images / AFP

VinFast revealed its full line-up of electric vehicles at CES 2022. AP

The VF 5 electric SUV on display at CES 2022. Reuters

VinFast also makes electric scooters at the plant in Haiphong. Holly Aguirre / The National

Scooters are a large part of Vietnam culture and VinFast plans to soon be all-electric. Holly Aguirre / The National

Assembling scooters at the VinFast factrory. Holly Aguirre / The National

VinFast electric scooters in Haiphong, Vietnam. Holly Aguirre / The National

Scooters are a big part of culture in Vietnam. Holly Aguirre / The National

A VinFast vehicle outside the factory in Haiphong. Reuters

Outside VinFast's factory in Haiphong. Reuters

In the six years it has been operating, VinFast has taken in $9.3 billion of financing to cover its operating and capital expenditures, much of it coming from Mr Vuong’s other businesses.

Still, the company, which began building a factory in North Carolina last month, forecasts sales will reach 45,000 to 50,000 this year and Mr Vuong predicts it will break even by the end of 2024.

VinFast had been planning a normal initial public offering, but scrapped that and opted for a Spac listing after investor appetite for money-losing start-ups waned over the past year. Instead, it agreed to merge with blank-check company Black Spade Acquisition, founded by casino mogul Lawrence Ho.

Mr Vuong, who studied geoeconomic engineering in Russia, made his fortune in the 1990s in Ukraine with a business making instant noodles. The Hanoi-born businessman sold it to Nestle in 2010, nine years after he had returned to Vietnam.

By that time, he’d already established publicly-traded Vingroup, focused on real estate, resorts, schools, shopping malls and more. The firm booked revenue of $4.4 billion last year, and remains a major shareholder in VinFast.