Over the past decade, Vietnamese EV manufacturer VinFast Auto has spent billions of dollars pursuing rapid expansion.
Now, a proposal to sell its two primary factories and move roughly $7 billion in debt off its balance sheet has raised fresh governance concerns surrounding billionaire Pham Nhat Vuong’s Vingroup conglomerate.
Last week, VinFast Auto announced a multi-party deal to sell its Vietnamese manufacturing business for $506 million, with buyers also taking on about $6.9 billion in debt. The company said the move will help it shift to an “asset-light” model focused on research and product development.
According to Vingroup, removing the manufacturing unit from its books will leave VinFast largely debt-free. Manufacturing expenses were a key factor behind the EV maker’s $3.9 billion loss last year, and the company has yet to post a profit since launching in 2017.
But the deal has raised eyebrows among some analysts and retail shareholders both for its complexity and the involvement of investors with ties to Vingroup and Vuong, the founder.
Concerns have also focused on Nguyen Hoai Nam, who recently took control of the company set to acquire more than 95% of the manufacturing business. Just days before the deal was announced, he gained majority control of FIRD, a former VinFast Auto unit previously owned by Vingroup and founder Pham Nhat Vuong.
Analysts questioned the rapid ownership shift and FIRD’s swift emergence as the lead buyer. VinFast said it was not involved in the transactions and could not comment.
Complex Deal Structure Raises More Questions
Another concern is the transaction structure. The manufacturing business will first be acquired by Vuong, FIRD and another company, Ngoc Quy Investment and Trading Development, before the ownership is reshuffled again.
Once the deal is completed by September, only two of the three investors will remain: FIRD, which will own 95.5%, and Vuong, who will retain less than 5%, according to the filing.
The process “raises the question of the role and involvement” of Ngoc Quy Investment, Jaouadi said, since it will not ultimately hold a stake.
VinFast will retain its assembly plants in Indonesia and India, along with patents for its newest generation of EVs. VinFast’s shares have fallen about 12% since the deal was unveiled on May 12.
Foxconn Interested In 2021
Analysts say outsourcing manufacturing could allow VinFast Auto to focus on key areas like software development. Under the deal, the new owners will also be able to produce vehicles and batteries for third parties, fueling speculation that another automaker could eventually partner with them.
Vingroup confirmed it had previously held talks with Foxconn over VinFast’s production lines in 2021, though no agreement was reached. The company said it currently has no plans to sell the facilities to Foxconn or any other manufacturer.
(With inputs from Reuters)
