Singapore’s sovereign wealth fund GIC has decided to fully exit its four-year-old investment in Vietnamese taxi firm Vinasun (VNS) at a time when traditional cab operators are struggling given the rise of ride-hailing technology players.
In a disclosure to Ho Chi Minh City Stock Exchange, GIC said it sold all the 5.4 million shares, equivalent to a 7.96 per cent stake, it held in Vinasun on May 25. At a price of VND13,900 ($0.6) apiece, GIC divested its holdings for VND75 billion ($3.3 million) at a discount.
GIC, one of the first foreign funds to invest in Vinasun, injected VND202 billion ($8.8 million) to purchase a 7.96 per cent stake in the taxi firm in August 2014. So, GIC suffered a loss of about VND120 billion ($5.28 million) on its four-year-old investment.
The rapid development of ride-hailing firms such as Uber and Grab since 2014 has led traditional Vietnamese taxi firms, including Vinasun, on the downhill path despite efforts to revive their fortunes.
In a recent dispute, Vinasun sued with ride-hailing major Grab claiming the latter’s “illegal operations” caused its revenues to decline. The local taxi firm reported that its revenue has been declining year after year. It earned VND4.25 trillion ($187 million) in revenue and VND205 billion ($89.7 million) in net profit in 2017, down 10 and 34 per cent respectively compared to 2016.
Moreover, the taxi firm is seeking a compensation of VND41.2 billion ($1.8 million) for the loss in profit it alleges it suffered due to Grab’s operations in 2016 and 2017.
This year, Vinasun targets revenue of only VND1.75 trillion ($77 million), profit after tax of VND95 billion ($4.18 million), down 50 per cent year-on-year, making the lowest profit since 2010.
Singapore-based sovereign wealth fund GIC is one of the largest financial investors in Vietnam’s capital market with holdings in big companies such as Masan Group, Vietjet Air, Vinamilk, FPT, PAN Group and Vinasun.
In April, GIC invested about $1.3 billion in leading Vietnamese property developer Vingroup and related entities for its real estate arm ahead of its market debut, slated for the second quarter of this year.