Key Takeaways
Vietnamese EV maker VinFast Auto will shift nearly $7 billion in debt and sell its main factories for $506 million to a group of investors with close ties to its parent company, Vingroup.
"From a strategic and financial perspective, this move makes sense," Mehdi Jaouadi, a partner at Singapore-based consultancy YCP, said. "However, from a governance perspective, this strategic decision has some red flags."
The deal, set to close by September, will see VinFast sell its Vietnamese manufacturing arm to its founder, Pham Nhat Vuong, and a company controlled by a Vincom Retail board member. The buyers will assume roughly $6.9 billion in debt, a key driver of VinFast's $3.9 billion loss last year.
The transaction has sent VinFast shares down 12% since its May 12 disclosure, as investors question the complex structure and related-party nature of the buyers. The move aims for an "asset-light" model but raises concerns about corporate governance at the unprofitable automaker, which has yet to turn a profit since its 2017 founding.
Under the multi-party deal, the manufacturing business will be acquired by a group including founder Pham Nhat Vuong and Future Investment and Trading Development (FIRD). FIRD, which will ultimately hold a 95.5% stake, is controlled by real estate businessman Nguyen Hoai Nam, a board member of former Vingroup unit Vincom Retail.
The structure has drawn scrutiny from analysts. A third company, Ngoc Quy Investment and Trading Development, will participate in the initial purchase before its stake is reshuffled, prompting questions about its role. VinFast told Reuters it was "not a party to these transactions and therefore does not have the basis or authority to comment."
By outsourcing its manufacturing, VinFast says it can focus resources on research and development. The new factory owners will be able to produce cars and batteries for third parties, though Vingroup denied it had plans to sell the facilities to an original equipment manufacturer like Foxconn.
The debt transfer is a critical attempt to clean up VinFast's balance sheet ahead of future funding needs. Investors will be watching for the deal's completion in the third quarter and any subsequent third-party manufacturing agreements the new factory owners may sign.
This article is for informational purposes only and does not constitute investment advice.
