VinFast-linked taxi firm GSM eyes US, EU expansion ahead of Hong Kong IPO

By Francesco Guarascio and Phuong Nguyen

HANOI, Sept 3 (Reuters) - Vietnamese electric taxi operator Green and Smart Mobility (GSM), a partner of VinFast, the country's largest carmaker, plans to expand into the U.S. and Europe ahead of a targeted 2028 initial public offering in Hong Kong, the company said.

The move underscores the firm's growing overseas ambitions after it rapidly gained market share in Vietnam after a 2023 launch. It also comes as VinFast seeks to increase international sales of its electric vehicles, which are the only ones used by GSM, following unsuccessful attempts to expand into Europe and the U.S.

GSM, which is owned by VinFast CEO Pham Nhat Vuong and his family, plans to deploy fleets in the U.S., Sweden and the Netherlands by the end of this year and expand into additional European markets in 2027, a spokesperson said in a recent interview, disclosing for the first time the scope and timing of the company's growth plans.

"These expansion initiatives are being undertaken ahead of GSM's planned Hong Kong IPO in 2028," the spokesperson said, confirming the listing venue, which was first reported by Reuters in March.

The company said earlier that preparations for the IPO would begin this year with initial offers to potential large investors. It declined to elaborate on potential talks with investors.

It also declined to disclose its target valuation or fundraising goal. GSM previously said its advisers suggested a valuation of around $20 billion.

GSM operates in several Asian markets, competing with Singapore-based ride-hailing firm Grab and Indonesia's GoTo Gojek Tokopedia; it recently deployed a fleet of vehicles in Denmark.

VinFast has opened car assembly factories in India and Indonesia. And earlier this week, Reuters reported that the company suspended plans to assemble some of its electric vehicles in India.

It has been sued in the U.S. over delays in the construction of a plant that received public subsidies.

VinFast sold nearly 200,000 cars last year, 11% of which were overseas. It does not release market-based sales breakdowns. 

A COSTLY BUSINESS MODEL

A key driver of GSM's rapid growth has been a capital-intensive model that relies on employed drivers operating vehicles owned by the company, which purchases them from VinFast at discounted prices.

That contrasts with lighter-asset models used by ride-hailing competitors, including Grab or Uber, which largely rely on non-employees who use their own vehicles.

The strategy has made GSM's turquoise-coloured taxis a common sight in Vietnamese cities, while helping to support revenue growth at loss-making VinFast. GSM has said it intends to buy 1 million VinFast cars between 2026 and 2030.

Mehdi Jaouadi, an auto industry analyst and partner at Singapore-based consultancy YCP, said GSM's growth strategy is "high-risk," adding that it has yet to be determined "whether overseas markets can achieve sufficient fleet utilization to provide enough scale to balance the risk.”

"At the current pace and ambition of GSM’s expansion, continuing to fund company-owned fleets across several markets could increase reliance on external capital, unless operating cash generation improves or GSM succeeds in shifting more fleet capex to drivers and partners,” he said.

VinFast sold 72% of its vehicles to related parties, primarily GSM, in 2023, according to the Nasdaq-listed company's filings.

GSM's share of VinFast's car sales has since fallen to about a quarter and is expected to remain above 20% in the coming years, the spokesperson - representing both GSM and VinFast - said.

The unprofitable taxi operator is shifting towards a hybrid model in Vietnam that combines company-employed and freelance drivers in an effort to lower costs and expand its fleet. Around 40% of vehicles currently operating under the GSM platform in Vietnam are company-owned, it said.

In the U.S. and European Union, GSM plans initially to rely only on company-owned vehicles and employed drivers before shifting to a platform model that incorporates non-employees, the spokesperson said.

The company declined to disclose its debt position or identify its main creditors.

VinFast's parent, Vingroup, controlled by Vuong, had total liabilities including debt and other financial obligations of $42.8 billion as of June this year, according to its latest financial statements.

Vuong also controls several private companies that do not disclose their liabilities.

(Reporting by Francesco Guarascio and Phuong Nguyen; Editing by Miyoung Kim and Thomas Derpinghaus)