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OPINION

Updated January 9th, 2024 at 17:14 IST

VinFast charges up its stock market unsuitability

The Vietnamese EV maker is replacing its CEO and CFO less than five months after going public.

reuters
Katrina Hamlin
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VinFast has forged many partnership | Image:VinFast Auto
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Too fast. VinFast Auto is barely tinkering with a sputtering governance engine. The New York-listed Vietnamese electric-car maker said on Friday that it is replacing both its CEO and CFO less than five months after going public via a merger with a special-purpose acquisition company. That by itself raises red flags. But the new boss is founder and Chair Pham Nhat Vuong. This latest development is a reminder that the automaker is not suited for public markets.

Vuong owns almost all of VinFast - 97.7% when it listed in August – courtesy of three different entities, including parent Vingroup, which he controls. So, he was poorly placed to represent other stakeholders as chair. Switching roles with Le Thi Thu Thuy, CEO since 2021, at least improves that situation. But it was a low bar, and while new Chair Thuy's background in investment banking may prove useful in working with unaffiliated current and future investors, she's still an insider.

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Moreover, these few tweaks under the bonnet arguably worsen the company's key-man risk. Vuong isn't just CEO and near-total owner, he is also the main financial backer for VinFast, which reported a net loss of $623 million in the quarter to the end of September. In April, Vuong donated $1 billion of personal assets to the company, alongside $500 million in non-refundable grants and a $1 billion loan from Vingroup.

Shares closed down more than 3% on Monday after the leadership switcheroo, but how they trade is an oddity, thanks to Vuong's outsized shareholding. The company says it wants to increase the number of shares traded in the market but for now the miniscule free float renders the stock volatile. After completing its merger with a SPAC, VinFast's market value rocketed, reaching almost $200 billion. It quickly reversed and now trades 92% below its peak and 31% below its listing price.

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In the months ahead, Vuong and Thuy's not-so-new team will put themselves to the ultimate driving test as they attempt execute Vinfast's ambitious expansion plans. These include a factory in India, announced a day after the leadership change, and plans to enter 50 new markets while competing with Tesla on U.S. roads. Perhaps they will succeed in creating sustainable value as a public company. At present though, VinFast looks and acts like a private firm.

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Published January 9th, 2024 at 17:14 IST

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