Vietnamese tech titan, VNG Ltd, has decided to delay its ambitious $150 million U.S. initial public offering (IPO) until next year, based on sources with knowledge of the matter. While the exact reasons for the postponement remain undisclosed, the decision seems to be influenced by the current unpredictable market conditions. A person with direct information about this development mentioned this delay but chose to remain anonymous as the data isn’t public yet. VNG chose not to comment on the situation.
Background of VNG Ltd
Founded in 2004 and headquartered in Ho Chi Minh City, VNG initially made its mark as a game publisher under the name Vinagame. With time, the company expanded its horizons. It now offers a plethora of services:
- Online gaming
- Messaging through Vietnam’s most popular app, Zalo
- Cloud services
- Mobile payments
- Music sharing
- Video streaming
- News portals
Remarkably, VNG became Vietnam’s first unicorn, signifying a startup with a valuation of $1 billion or more.
Road to the U.S. Listing
VNG’s documents for a Nasdaq listing came into the public domain in late August. The tech firm had set its sights on making a debut either in late September or early October. These plans were shelved after initial investor meetings, even before a formal roadshow could take place. However, the intent remains firm. VNG is hopeful about a New York listing, potentially in the first half of 2024. Achieving this would make it the pioneer Vietnamese tech enterprise to be listed in the U.S.
Global IPO Climate
The global sentiment surrounding new share sales is currently in a delicate state. Investors globally are bracing for interest rates to sustain at higher levels in most advanced economies. As a testament to this climate:
- The global IPO rate fell by 34% for the first nine months leading to mid-September 2023, compared to the same timeframe in 2022. This data is according to the London Stock Exchange.
- Notably, Arm Holdings, which experienced a 25% growth on its initial trading after raking in close to $5 billion (making it 2023’s most significant IPO), closed at a value of $52.16, just slightly over its issue price of $51.
Recent Market Trends
Mixed performance by recent public companies seems to have further influenced VNG’s decision. Both Arm Holdings Plc and Instacart experienced a drop, falling below their IPO prices. Meanwhile, Klaviyo Inc., despite a promising start in its trading debut, saw only a modest 12% rise above its offering price.
VNG’s postponement also appears in the wake of VinFast Auto Ltd.’s dramatic U.S. market entry. The electric vehicle maker initially saw a staggering 504% growth over six days post-merging with a blank-check firm. However, this enthusiasm was short-lived, with the shares wiping out most of these gains.
Southeast Asia’s Push Towards U.S. Markets
Southeast Asia has been a hotspot for tech innovations and startups, and with VNG leading the charge, many are eyeing the vast potential of the U.S. market. The trend of Southeast Asian companies considering U.S. listings stems from an increasing global recognition of the region’s digital capabilities and its rapid economic growth. These firms believe that by entering the U.S. stock market, they can access a broader investor base, gain international credibility, and secure more substantial financial resources.
Challenges Ahead
Despite the enthusiasm, breaking into the U.S. market is not without its hurdles. Stringent regulatory requirements, higher costs of compliance, and the need to navigate an unfamiliar business ecosystem can be daunting. Furthermore, there’s the challenge of competing with well-established U.S. tech giants and ensuring that their offerings stand out.
Looking Ahead
While global market conditions remain a concern, there’s a silver lining. Many Southeast Asian firms are pondering U.S. listings, anticipating a robust investor appetite, especially given the reduced presence of Chinese stock offerings.
VNG, which once started as a simple game publisher, had envisioned selling around 22 million shares in its U.S. IPO. Although it has not yet declared the price range for these shares, the company remains optimistic about its future listing prospects, aiming to capitalize on its strong portfolio and Vietnam’s emerging tech prominence.
