Vietnamese electric vehicle manufacturer VinFast announced on Friday a strategic share subscription agreement of up to $1 billion with U.S.-based investment firm Yorkville Advisors. Under the terms of the agreement, VinFast retains the option, though not the obligation, to request Yorkville’s subscription for up to $1.0 billion worth of ordinary shares during the agreement’s duration.
VinFast, which made a significant debut on the Nasdaq exchange in mid-August, achieving a valuation of approximately $85 billion on its listing day, has witnessed a subsequent decline in its share value by over 84%. Presently, the stock trades at $5.69 per share, a notable deviation from its initial valuation. David Mansfield, VinFast’s Chief Finance Executive, commented on the joint venture, emphasizing, “This new source of equity funding provides us with valuable optionality and access to capital to continue to expand our business on a global scale. While we are under no obligation to draw on the full amount, the transaction aligns with our goals of opportunistic capital raising while adding liquidity to our shares over time.”
Pham Nhat Vuong, the founder and primary stakeholder of VinFast and Vietnam’s wealthiest individual, remains the company’s chief financial supporter. In April, VinFast disclosed commitments for a fresh funding round totaling $2.5 billion to fuel its future development, with $1 billion sourced directly from Vuong.
Mark Angelo, President and Founder of Yorkville, expressed optimism about the joint venture, anticipating sustained success for VinFast. Notably, Yorkville had previously invested up to $400 million in electric vehicle manufacturer Lordstown, marking its second significant foray into the EV sector.
VinFast’s entry into the electric vehicle market coincides with a period of pricing pressure, largely driven by reductions from industry leader Tesla and various Chinese competitors. The automaker’s target for the year is to sell between 40,000 and 50,000 units, with approximately 22,000 cars already sold. The bulk of these sales were to a Vietnam-based fleet operator, also under Vuong’s control.
The strategic collaboration between VinFast and Yorkville Advisors is anticipated to furnish the Vietnamese carmaker with crucial access to capital, not only enabling overseas market expansion but also enhancing liquidity in the stock market for its shares.
Source: Reuters
