Tech Giant VNG Tests Stock Market Potential With UPCoM Listing

VNG Corporation — Vietnam’s first startup unicorn and biggest tech player — will begin listing on the local Unlisted Public Company Market (UPCoM) on January 5 at a $364 million valuation.

VNG, launched as a gaming startup in 2004, owns the popular social media app Zalo and digital content platform Zing, among many other tech products and services. It also has shares in the e-commerce platform Tiki.

A Tech in Asia report noted that VNG shares will be traded starting Thursday on the UPCoM, the board for firms yet to be listed on the Hanoi Stock Exchange. According to its prospectus, VNG will list 35.8 million shares at a reference price of VND 240,000($10.15) apiece. It will have the ticker symbol VNZ.

Listing on UPCoM is an unexpected but significant move for the tech giant that has been eyeing a US IPO for years. VNG was valued at $2.2 to $2.5 billion a year ago and was planning to offer a 12.5% stake in its public market debut.

UPCoM is one of three bourses in Vietnam. It’s used by companies testing the stock market before taking the official and overseas IPO route.

In 2017, VNG and Nasdaq signed a memorandum of understanding to explore the former’s IPO opportunity.

“Vietnam’s technology industry has grown rapidly and drawn attention from investors around the globe. A successful listing on Nasdaq will further our commitment to providing world-class online services that revolutionize digital businesses,” Le Hong Minh, CEO and co-founder of VNG, said back then.

VNG’s goal to become a global technology company will help elevate Vietnam’s reputation in the tech landscape. Amidst a robust economy and recent modern developments, Vietnam is still mostly known for agriculture and textiles.

Winning against global giants

VNG’s massive success has been a source of pride for the country. The tech company has created products that fearlessly challenged more established and globally known enterprises like Meta.

Its social media app Zalo is currently the most popular social network among Vietnamese, despite it being a latecomer in the social media landscape. A survey by Decision Lab last year found that 88% of Vietnam’s 72 million internet users use Zalo to connect with loved ones and friends.

The app had 74.7 million monthly active users in February 2022, while Messenger had 67.8 million, according to the Ministry of Information and Communications.

“We are proud about the fact that we openly competed with the best in the world,” Minh told Bloomberg in December. “We were able to build a dominant product because of our product strength and ability to understand users.”

VNGGames, its gaming arm, was also recognized as one of the top ANZSEA-Headquartered game publishers by AppAnnie. It aims to reach 320 million customers this year as it expands internationally.

“In the future, Vietnam won’t just be known for coffee and manufacturing. We can build capabilities and people and provide services to the global technology industry,” the CEO said.

2022 losses

Along with the global economic downturn in 2022, VNG also suffered huge losses. In the first nine months of last year, it posted losses of over VND 764 billion after its investments in ZaloPay operator Zion and in Tiki. Zion reported a loss of over VND 1.2 trillion the year prior.

According to its consolidated third-quarter financial statements published in October, VNG had net revenues of VND 2.1 trillion ($89.2 million), down 3.7% from last year. Its total liabilities as of September 2022 amounted to VND 3.61 trillion ($153 million), up nearly 24% from the previous period.

In 2021, VNG reported a gross loss of VND 283 billion ($12.4 million).

The company was also ordered to pay more than VND 14.3 billion ($606,000) over intellectual property rights infringements. The Court of First Instance concluded that VNG pirated three historical series to its video entertainment platform Zing TV.

Mobile music app Zing MP3 also faced copyright infringement lawsuits in the US.