October 24, 2022
Finnfund invests in VinFast, manufacturer of Vietnam’s first fully-electric public transport bus fleet
Finnfund is one of the investors in a 135 million US dollar financing package to VinFast in Vietnam. The company manufactures Vietnam’s first fully-electric public transport bus fleet and developed the first national electric vehicle (EV) charging network. The investment will support Vietnam’s efforts to achieve net-zero greenhouse gas emissions and expand high-tech manufacturing industries. Vietnam’s transport sector accounts for 18% of the country’s annual greenhouse gas emissions, and its decarbonization, through options like e-mobility, will directly impact the country’s ambition to achieve net zero emissions by 2050.
“VinFast’s development impact is so strong because it not only supports emissions reduction in some of the most polluted cities in Asia, but also creates world-class manufacturing jobs in an industry which, in Vietnam, is still emerging”, says Finnfund’s Investment Manager Noah Law. “The VinFast success story is a result of the company’s ability to create a world-class automotive supply chain in the country in just a few years.”
The investment in VinFast is well-aligned with Finnfund’s e-mobility strategy – supporting the innovation and heavy capital investment needed to succeed in the electric automotive industry by harnessing the strength of the Vingroup’s balance sheet and integrating the national charging network. “It’s not easy to bring together the technical expertise, supply chains, and capital needed to create a company like VinFast in just a few years, but Vingroup has been able to achieve something quite special”, Law says. “We encourage other electric automotive players in frontier markets to learn from the example of the VinFast business model.”
Finnfund’s investment supports the expansion of VinFast’s e-bus manufacturing. The company also manufactures electric cars and scooters.
Noah Law, Investment Manager, Finnfund, email@example.com, tel. +358 40 193 2668
Valpuri Mäkinen, Communications and Marketing Manager, firstname.lastname@example.org, tel. +358 50 384 2105
The Asian Development Bank (ADB) mobilized a $135 million financing package for VinFast Trading and Production Joint Stock Company (VinFast) for manufacturing Viet Nam’s first fully-electric public transport bus fleet and first national electric vehicle (EV) charging network. The assistance will support Viet Nam’s efforts to achieve net-zero greenhouse gas emissions and expand high-tech manufacturing industries.
The 7-year tenor climate financing comprises a $20 million loan funded by ADB, parallel loans $87 million facilitated by ADB as mandated lead arranger, and concessional financing of up to $28 million. The climate financing is certified by the Climate Bonds Initiative, a scientifically-based standard for labeling bonds, loans, and other debt instruments which contribute to addressing climate change.
ADB has partially offset the project’s risks by utilizing concessional financing from its managed trust funds comprising a loan of up to $20 million from the Australian Climate Finance Partnership funded by the Australian Government (ACFP); a loan of up to $5 million from the Clean Technology Fund (CTF); and a grant of up to $3 million from the Climate Innovation and Development Fund, which is funded by Goldman Sachs and Bloomberg Philanthropies.
Parallel loans were also mobilized by ADB from Export Finance Australia, the Finnish Fund for Industrial Cooperation, Oesterreichische Entwicklungsbank AG, and ResponsAbility.
“This project delivers a high-impact, sustainable transport solution for Viet Nam while helping it meet its climate goals and supporting the growth of climate finance in the region,” said ADB Private Sector Operations Department Director General Suzanne Gaboury. “Asia and the Pacific is the frontline of the global fight against climate change, and private sector projects like this one with innovative partners such as VinFast are crucial to help its countries decarbonize their economies.”
Viet Nam’s transport sector accounts for 18% of the country’s annual greenhouse gas emissions, and its decarbonization, through options like e-mobility, will directly impact the country’s ambition to achieve net zero emissions by 2050.
Additionally, the project includes a technical assistance (TA) of $950,000 from the ACFP and the CTF, focused on raising consumer awareness about e-mobility’s economic, environmental, and social impacts to help advance its market penetration. The TA will also help promote the role of women studying for or working in fields related to science, technology, and mathematics.
“We are delighted to receive this extensive support and a long-term financing package from ADB and several esteemed international development finance Institutions. We see this as a vote of confidence in our efforts to become a global smart mobility company that offers environmentally friendly public transportation, and to advance Viet Nam’s transition to a low carbon economy,” said VinFast’s Global CEO Thuy Le
Established in 2017, VinFast is Viet Nam’s first domestic car company and e-vehicle manufacturer. VinFast is a subsidiary of Vingroup Joint Stock Company, Viet Nam’s largest private enterprise and the largest listed company in Viet Nam. VinFast develops e-cars for the domestic and international markets and is investing in a nationwide network of fast-charging units to support its e-vehicle expansion in Viet Nam.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.