EV maker VinFast raised $3.5 B funding from Vingroup & founder Pham Nhat Vuong
The largest private conglomerate in Vietnam, Vingroup, and its chairman, Pham Nhat Vuong, announced a sizable financial commitment to VinFast, an electric vehicle manufacturer listed on the Vietnamese Nasdaq.
Vingroup said in a statement on Tuesday that it intends to lend VinFast up to 35 trillion Vietnamese dong ($1.4 billion) by the end of 2026.
Vuong has also personally committed to sponsoring the event with a pledge of 50 trillion dong ($2.1 billion).
Separately, Vingroup will convert all of its current loans to VinFast Vietnam, totaling around 80 trillion dong ($3.3 billion), into preferred shares with dividend rights.
The goal of the support plan is to give VinFast enough money to cover its operations, investments, and other commitments.
By the end of 2026, the break-even point and cash flow balance are to be reached. Nonetheless, VinFast is still dedicated to obtaining funding on its own to cover its expenses.
Vingroup and Vuong’s assistance will only be used if these separate attempts fall short of expectations.
The operation of a 300,000 vehicle per year manufacturing plant in Cat Hai, Hai Phong, is part of VinFast’s completed initial investment phase. Along with finishing its product line’s research and development, the company is switching from a direct-to-consumer to a dealership distribution model.
VinFast is currently in its expansion stage, with an emphasis on increasing sales in every market and streamlining its cost structure.
Vingroup’s support agreement is predicated on a thorough analysis of the possible effects on its profitability and cash flow.
The objective is to preserve Vingroup’s financial stability while also helping VinFast. Vingroup anticipates that its investments will pay off once VinFast becomes profitable and financially independent.
Vingroup intends to relieve short-term financial strain on the electric vehicle manufacturer by converting loans to VinFast totaling roughly 80 trillion dong into preferred equity shares of VinFast Vietnam.
Through dividend rights and the ability to convert preferred shares into common shares of VinFast Vietnam Manufacturing and Trading Company or interests in VinFast Singapore, this action will enable Vingroup to keep its stake in VinFast.
The Vingroup’s operations, subsidiary dividends, and, if required, the strategic sale of some investments and subsidiaries at a fair market value will all be used to finance the new loan, which has a maximum value of 35 trillion Vietnamese dong.
As the CEO and largest shareholder of VinFast, Vuong will personally contribute 50 trillion Vietnamese dong. The interests of Vingroup and its shareholders will not be impacted by this personal commitment.
The decision to support VinFast was made in view of the company’s recent success as the best-selling car brand in Vietnam and its encouraging global market performance, which confirmed its potential for further expansion.
Over 51,000 electric vehicles have been delivered by VinFast to the Vietnamese market in the first ten months of this year.
Around the world, VinFast keeps growing its company in the US, Canada, and Europe while quickly entering new markets in places like the Philippines, India, Indonesia, and the Middle East.
