VinFast has concluded its initial investment phase, which includes the operation of a 300,000-vehicle-per-year manufacturing plant in Cát Hải, Hải Phòng. — Photo courtesy of the company
Vingroup, Việt Nam’s largest private conglomerate and its Chairman, Phạm Nhậtt Vượng, announced on Tuesday a significant financial commitment to VinFast, the Vietnamese Nasdaq-listed electric vehicle maker.
Vingroup plans to lend VinFast up to VNĐ35 trillion (US$1.4 billion) by the end of 2026. Additionally, Vượng has personally pledged VNĐ50 trillion ($2.1 billion) in sponsorship.
In a separate move, Vingroup will convert all existing loans, about 80 trillion dong ($3.3 billion), to VinFast Vietnam into dividend-entitled preferred shares.
The support plan is designed to provide VinFast with sufficient financial resources to fund operations, investments and other obligations. The goal is to achieve the break-even point and cash flow balance by the end of 2026.
However, VinFast remains committed to independently raising capital to meet its financial needs. The support from Vingroup and Phạm Nhậtt Vượng will be only be used if these independent efforts do not meet expections.
VinFast has concluded its initial investment phase, which includes the operation of a 300,000-vehicle-per-year manufacturing plant in Cát Hải, Hải Phòng. The company has also completed research and development of its product line and is shifting its distribution model from direct-to-consumer to dealership model. VinFast is now in its growth phase, focused on boosting sales across all markets and optimising its cost structure.
Vingroup's support agreement is based on a careful assessment of the potential impact on its cash flow and profitability. The goal is to maintain a balance between supporting VinFast and sustaining Vingroup's own financial health. Once VinFast achieves profitability and financial independence, Vingroup expects to benefit from its investments.
By converting loans to VinFast totalling about VNĐ80 trillion into preferred equity shares of VinFast Vietnam, Vingroup aims to alleviate short-term financial pressure on the electric vehicle maker. This move will allow Vingroup to maintain its stake in VinFast through dividend rights and the option to convert preferred shares into common shares of VinFast Vietnam Manufacturing and Trading Company or interests in VinFast Singapore.
The new loan of up to VNĐ35 trillion will be funded through the Vingroup’s business activities, dividends from subsidiaries and, if necessary, the strategic divestment of certain investments and subsidiaries at a fair market value.
Vượng, as VinFast's CEO and major shareholder, will personally sponsor VNĐ50 trillion. This personal commitment will not impact the interests of Vingroup or its shareholders.
This support decision was made in light of VinFast recently becoming the top-selling automotive brand in Việt Nam and achieving positive results in the global market, affirming its potential for future growth. — VNS