Tech unicorn VNG suspends sale of 7.1 million treasury shares

VNG, one of four tech unicorns in Vietnam, will suspend the offering of over 7.1 million treasury shares to the BigV Technology Corporation.

The corporation will also reduce its charter capital from VND358.44 billion ($15.12 million) to VND287.36 billion ($12.12 million), as approved by the firm’s annual general meeting of shareholders held July 7.

VNG said it did not offer treasury shares to BigV Technology for several objective reasons. After the sale was approved last year but not implemented, the company carefully reconsidered the issue and came up with a new plan for 2023.

In mid-December 2022, VNG had agreed to sell over 7.1 million treasury shares to BigV Technology Corporation for VND177,881 ($7.5) per share, which would account for 24.7% of the firm’s shares in circulation. The sale was to take place this year.

The offering price of $7.5 per share meant proceeds of VND1.26 trillion ($53.37 million). The transfer of these shares would be restricted for a year after the transaction was completed.

If the purchase was finalized, BigV would increase its VNG stake to 30.5%, or more than 8.7 million shares.

VNG has said that the losses incurred by ZaloPay was anticipated and a long-term investment. With foundation products, VNG focuses on quality, technology, and new customer base looking for revenue opportunities.

Zion JSC, owner of ZaloPay, recorded losses of VND30.7 billion ($1.3 million), VND180.6 billion ($7.6 million), VND344.9 billion ($14.6 million), VND685.98 billion ($28.99 million), VND1.23 trillion ($51.9 million) and VND1.31 trillion ($55.4 million) in 2017, 2018, 2019, 2020, 2021 and 2022, respectively.

VNG has targeted revenues of VND9.28 trillion ($394.5 million) and a loss of VND572 billion ($24.3 million) in 2023.

This year, it will continue to invest in key business segments like video games, advertising, e-wallets and products that use artificial intelligence. It has proposed that no dividend is paid from the accumulated profit of more than VND5 trillion ($212.5 million) it held at the end of last year.

VNG reported a loss of VND90 billion ($3.84 million) in the first quarter of this year, compared to VND130 billion ($5.54 million) last year. Its first quarter net revenue reached VND1.85 trillion ($78.93 million), up 11% year-on-year, according to the company's consolidated Q1 financial statement.

As of March 31, 2023, VNG's total assets were valued at VND8.98 trillion ($382.48 million), up 0.8% compared to the beginning of the year; while liabilities increased by 4% to VND3.95 trillion ($168.46 million).

The company had posted a loss of VND1.53 trillion ($65.4 million) in 2022.

Registered on the unlisted public company market UPCoM as VNZ, the company attributed the loss to additional expenses related to taxes, intangible fixed assets and provisions for financial investments.

It was the fourth largest loss reported by a listed company in Vietnam in 2022, after Vietnam Airlines, Vietjet, and HAGL Agrico.

Founded in 2004 by Vietnamese businessman Le Hong Minh, 45 now, VNG is a leading technology services provider in Vietnam. It was officially valued at $1 billion in the World Startup Report, becoming the first unicorn in Vietnam.

The corporation in January named Vo Sy Nhan as its new chairman, replacing Le Hong Minh. Minh remains its general director.

As of November 28, 2022, VNG had three major shareholders: VNG Limited, headquartered in the Cayman Islands, holding 49% of charter capital or 61.1% of outstanding shares; BigV Technology Corporation with a 4.6% stake and accounting for 5.7% of outstanding shares; and Le Hong Minh, with a 9.8% stake and 12.3% of outstanding shares.

On the UpCOM, VNZ shares closed Monday at VND747,900 ($31.6).