Vietnam's VNG files for US IPO

The company is one of only four unicorns in Vietnam, alongside mobile wallet MoMo, payments and B2B digital banking platform VNLife, and non-fungible token (NFT) gaming start-up Axie Infinity, also known as Sky Mavis. VNG was the first to reach this milestone in 2014.

Tencent Holdings is the largest external investor with 47.4% of the company’s class A ordinary shares. This translates into a 23.2% voting interest because of a dual-class share structure that favours holders of class B shares, notably Minh Hong Le, co-founder, chairman and CEO of VNG. GIC owns 11.1% of the class A shares, while Temasek Holdings and Ant Group have 6.9% and 5.7%, respectively.

IDG Ventures Vietnam was the earliest investor, backing VNG in 2005 when it was known as VinaGame. Tencent joined the cap table in 2008, AVCJ Research’s records show, and CyberAgent arrived two years after that. Both IDG and CyberAgent have since completed exits, with the latter’s exit coming in 2016.

VNG plans to sell 21.7m class A shares in the offering, after which there will be a total of 137.4m class A shares outstanding, according to a filing. Pricing has yet to be determined.

Founded in 2004, VNG has evolved from a five-person start-up into Vietnam’s dominant digital ecosystem, with interests spanning mobile gaming, social media, and financial technology. It also has a portfolio of “long-term opportunities,” including cloud infrastructure.

“Armed only with perseverance and the indomitable spirit of youth, we faced the challenges of running a start-up without any resources and experience through numerous trials and errors. We prepared for the launch of the first PC online game in Vietnam by studying PC game magazines and recruiting employees in local gamer forums,” the founders said in a letter accompanying the prospectus.

“We travelled Vietnam on motorcycles, covering 5,000 internet cafes with game posters. We built our own makeshift data centre and a scratch-card payment system before the launch of the first game. Somehow, our game exceeded its three-year forecast in the first week and is still running today, 19 years later.”

Games – licensed from third parties such as Tencent and developed in-house – remain the core of the business. VNG’s overall revenue reached VND 7.52trn (USD 316m) in 2022, up from VND 7.37trn in 2021. Of that, VND 6trn came from gaming. The company has a nearly 40% share of Vietnam’s overall mobile games market.

VNG leveraged revenue and users from its gaming business to enter other verticals. Zalo was launched in 2012 and has since developed into Vietnam’s number-one messaging platform with 75m monthly active users (MAUs). The company is also the market leader in music streaming and online news through Zing MPS (28.7m MAUs in the second quarter of 2023) and Bao Moi (49.7m daily content views in 2022).

Social media, which is mainly monetised through advertising, generated VND 1.6trn in revenue last year, while the long-term opportunities portfolio contributed VND 286bn. VNG reported negative revenue of VND 389m for fintech – represented by the ZaloPay digital wallet – because customer acquisition-driven incentives exceeded commission and fees.

On an overall basis, the company’s net loss widened to VND 2.06trn in 2022 from VND 732.3bn in 2021. This was largely due to increasing sales and distribution costs and administrative expenses.

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• Topics
• Southeast Asia
• IPO
• Technology
• Financials
• Vietnam
• GIC Private
• Temasek Holdings
• Ant Financial
• Tencent
• Fintech
• TMT
• gaming