IPO and simultaneous listing: A new boost for Vietnam's stock market

After more than two decades of development, Vietnam's stock market is entering an important period of reform. Decree 245/2025/ND-CP[1] for the first time allows enterprises to register for listing at the same time as the initial public offering (IPO), instead of having to complete each procedure in the same order as before. At first glance, this change is just an administrative reform, but in fact it has a direct impact on the efficiency of capital mobilization of enterprises and the attractiveness of the entire market.

For many years, IPOs and listings in Vietnam have been implemented as two almost independent processes. 

The timing of reform also has many meanings. When FTSE Russell has confirmed the roadmap to upgrade Vietnam to a secondary emerging market[2], the market not only needs more listed companies but also needs an IPO mechanism that is transparent enough, effective and close to international practice.

The biggest bottleneck of an IPO is the cost of capital, not the procedure

For many years, IPOs and listings in Vietnam have been implemented as two almost independent processes. After completing the offering, the enterprise still has to continue to carry out a series of procedures to become a public company, register for securities depository, complete the listing dossier and wait for the approval decision of the Stock Exchange. Even if the business has been approved for listing, there is still a certain amount of time before the shares are officially traded.

It is this gap that creates a "waiting area" between the time when investors invest capital and when they can transfer shares. For individual investors, it means that the cash flow is locked in for a period of time where they cannot actively handle the portfolio. For investment funds, especially foreign institutional investors, this is a significant liquidity risk because the ability to buy and sell shares is an important factor in a portfolio management strategy.

From a corporate finance perspective, this is the biggest cost that the old IPO process created. As liquidity risk increases, investors will demand a higher expected return to compensate for the period when stocks cannot be traded. That forces businesses to offer shares at a price lower than fair value or issue more shares to raise the same amount of capital. In other words, it is the gap between IPO and listing that increases the cost of capital for businesses.

This is also one of the reasons why the Vietnamese stock market has been absent from large-scale IPOs for many years. Many businesses choose to register for trading on UPCoM first and then officially list or delay the IPO plan because the benefits of raising capital are not attractive enough compared to the time, cost and uncertainty of the process. Meanwhile, many large enterprises continue to prioritize raising capital through private placements or looking for strategic investors instead of accessing the mass market.

What does Decree 245 change?

The most notable point of Decree 245 does not lie in the amendment of the conditions for public offering of shares or listing standards. The requirements for business results, charter capital, shareholder structure, corporate governance and information disclosure remain basically the same. The biggest change lies in the way the process is organized.

Under the new mechanism, enterprises can submit listing registration documents at the same time as IPO documents. Many documents such as prospectuses, audited financial statements, documents on governance and information related to the business are used for both procedures. This significantly reduces the volume of documents that must be prepared, while limiting the fact that the same content must be reviewed multiple times by the competent authorities.

More importantly, the appraisal of the dossier is carried out in the direction of coordination instead of sequential. When the procedures are implemented simultaneously, the gap between the time the enterprise completes the IPO and the time the shares are put into trading will be significantly shortened. What the market gets is not merely a faster process, but a predictable roadmap.

Predictability is especially important for capital markets. Investors are not only interested in how much capital the business raises or what sector it operates in, but also when their investment can be converted into liquid assets. A clear IPO schedule, tied to a specific listing timeline, significantly reduces the level of uncertainty in the investment process and contributes to improving the quality of the valuation of the entire issuance.

In fact, this is a model that has been applied for a long time in many developed markets such as Singapore, Hong Kong, the UK or the United States. These markets do not consider IPOs and listings as two independent administrative procedures but two links of the same capital raising process. Vietnam does not completely copy the international model, but the approach to this approach shows that the reform orientation is shifting from a procedural management mindset to a capital market development mindset.

Why do businesses and investors benefit?

The most obvious benefit of the concurrent listing registration mechanism is to reduce the cost of raising capital. When the waiting period for listing is shortened, the liquidity risk that investors have to bear also decreases. This helps narrow the discount in IPO valuation, thereby allowing businesses to raise more capital without having to issue additional shares or accept to sell shares below fair value.

However, the greater value of the reform lies not only in the cost of capital but also in improving the quality of the primary market. An IPO is only really successful when the business not only sells shares but also attracts a group of long-term investors who are able to accompany the post-listing development process. For institutional investment funds, especially foreign funds, transparency and predictability of the entire investment process are always as important criteria as the business prospects of enterprises.

In many cases, the delay between the IPO and the listing causes funds to reconsider their investment decisions because they cannot determine exactly when their investment becomes a liquid asset. When this time is well defined from the beginning, the level of uncertainty decreases and the appeal of the issuance increases.

The significance of the reform is even clearer in the context that Vietnam is simultaneously implementing many solutions to meet the criteria for upgrading the market, such as the non-prefunding trading mechanism, expanding information disclosure in English, improving the payment mechanism and continuing to improve regulations related to foreign ownership. Each individual reform may only address a specific bottleneck, but when implemented synchronously, they contribute to building a more transparent and friendly investment environment for international capital flows.

More importantly, the new mechanism affirms a change in management thinking. IPOs are no longer seen mainly as procedures for businesses to "go public", but return to their true nature as a capital mobilization tool of the economy. This is the long-term value that Decree 245 aims for.

A successful IPO profile cannot be built up for several months before being submitted to the regulator

The process is shortened, but the standard is not lower

Simplifying procedures does not mean reducing requirements for businesses. Decree 245 does not amend the conditions for public offerings or listing standards. Enterprises must still fully meet the requirements of financial capacity, corporate governance, information disclosure and transparency in accordance with the provisions of the securities law.

Even when the IPO and listing documents are reviewed simultaneously, the requirements for the quality of the documents may be even higher than before. Issues related to ownership structure, stakeholder transactions, corporate governance, internal control or information disclosure obligations will be comprehensively reviewed from the beginning instead of being handled at different stages.

Another notable point is that Decree 245 enhances the responsibility of consulting organizations in the process of preparing dossiers. This reflects the general trend of developed capital markets, where consulting organizations not only support the completion of procedures but also play the role of "gatekeeper", contributing to ensuring the quality of information before businesses approach investors.

That also puts higher requirements on the business itself. A successful IPO profile cannot be built up for several months before being submitted to the regulator. Preparation usually starts very early, through the process of standardizing governance, handling legal problems, perfecting the internal control system, reviewing material contracts, restructuring the ownership structure and improving the quality of financial statements.

However, the effectiveness of Decree 245 still depends significantly on the implementation process. The mechanism of registering for listing at the same time shall only promote its value when the State Securities Commission, the Stock Exchange and intermediary organizations coordinate unanimously in receiving, appraising and processing dossiers. In addition, situations that arise in practice, such as the processing of listing documents when the IPO is not successfully distributed or the scope of responsibility of each subject in the due diligence process, also need to be clearly guided to ensure consistency and limit legal risks.

Conclusion

Decree 245/2025/ND-CP does not create a breakthrough reform of IPO conditions, but it significantly changes the way the capital raising process on the stock market operates. As the gap between issuance and listing is narrowed, the cost of capital has the opportunity to decrease, valuation efficiency improves, and the market's attractiveness to domestic and foreign investors is also raised.

More importantly, in the context that Vietnam is entering a new stage of the market upgrade process, the advantage will belong to businesses that have prepared a governance, transparency and compliance platform to be ready to access public capital when the opportunity arises. This is also a decisive factor for the IPO to truly return to its true nature: an effective capital mobilization tool for businesses and a driving force for sustainable development for the Vietnamese stock market.