Investment

Currently, Ola Electric sources battery cells from South Korea-based LG Chem for its electric scooters. Battery cells are the most expensive component in an EV, and manufacturing these can cut costs by around 30%.

“When one looks at thematic investing, it is very important to catch some of the themes early and as any theme grows and unfolds, the investors get the advantage of carrying on with the growth of that theme. That is the rationale behind getting into funds allowing EV and AI based investing themes.”

As per the fresh guidelines, AIFs or VCFs will be allowed to invest in an overseas investee company, which is incorporated in a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s (IOSCO) Multilateral Memorandum of Understanding or a signatory to the bilateral Memorandum of Understanding with Sebi.

Illustrative image (Photo: VNA)

Hanoi (VNS/VNA) – Banks must tighten their assessment control of corporate bond investment s to avoid excessive risk and the misuse of funds raised by firms, experts said.

In early April, the Banking Supervision Agency, under the State Bank of Vietnam ( SBV ) conducted an inspection of corporate bond investment activities at seven banks, while the Ministry of Finance inspected one bank.

According to the SBV, by the end of 2021, there are 41 credit institutions holding 274 trillion VND (11.7 billion USD) of corporate bonds, of which more than 75% of them are held by ten major banks – Techcombank, MBBank, VP Bank , TPBank, BIDV, Vietcombank, VietinBank, HDBank, ABBank and SeABank. At some banks, the value of corporate bonds exceeds 10% of total assets.

Although the inspection results were not published, a SBV senior leader said in an interview with Vietnam Investment Review that a number of credit institutions failed to accurately assess bond issuance plans.

In particular, how companies planned to use the proceeds of corporate bond sales lacked clarity and transparency. Results from the inspection showed there are signs that firms have spent money from bond issuance for the wrong purposes, including cases where funds were used to repay bank loans, buy shares, lend, and transfer the money back to the issuers.

Economist Nguyen Xuan Nghia said that there is a phenomenon where capital raised from the issuance of bonds is circulated around to organisations and individuals that have relationships with each other or where the money is withdrawn in large quantities, causing the cash flow to be very complicated and difficult to determine the ultimate use of funds raised.

Pursuing growth and huge profits may have caused banks and other investors to overlook potential malfeasance in the corporate bond activities, Nghia added.

The violations also resulted from a lack of close attention by the board of directors, the executive board, and the leaders of units/divisions of some credit institutions in promptly correcting the shortcomings and mistakes internally. Inspection, control, and internal audits of credit institutions are not always effective, and internal regulations have not been regularly reviewed, updated, and completed, he added.

The issuers’ financial capacity can also be weak, including a high debt-to-equity ratio, no or low net revenue from main business activities, and undistributed profit in recent years, the SBV senior leader said.

“The determination of demand and term of bonds is not based on the actual bond issuance plans of the issuers,” the officer said, adding that the monitoring, supervision, and collection of documents proving the purposes of the money raised from bond issuances by issuers are still a formality, but investors often fail to fully exercise the rights permitted by law to manage and supervise the use of funds raised from bond issuance.

Moreover, the valuation and management of collateral have not been strictly controlled due to professional limitations, while some borrowers have not fully followed the provisions of the law, the SBV and the regulations of the credit institutions in their loan relationship.

According to a VNDIRECT Securities Company analyst, credit institutions must increase their capacity for rating and appraising debt, particularly corporate bond investments, in order to reduce risks.

Accordingly, the expert suggested that credit institutions need to step up inspection and supervision of the issuers’ use of capital to ensure that the capital is used for the right purposes, and strengthen risk management for corporate bond investments.

In addition, increasing the responsibility of credit institutions in the service provision agreements related to signed corporate bonds, implementing the responsibilities of the bondholders’ representatives in accordance with regulations. In particular, exercise all the rights permitted by law to control and supervise to ensure that funds raised from the bond issuance are used for the right purposes stated in the plan of the issuer./.

Based in Huntersville, North Carolina, eight-year-old Atom Power has developed a digital circuit breaker that provides more control, flexibility and reliability to EV charging , especially for commercial fleet operators and managers of multi-family dwellings, according to Chief Executive Ryan Kennedy.

Atom Power’s EV pedestal and wall chargers include an Internet-connected digital panel that houses the company’s solid-state circuit breakers. The devices enable safer charging, the company says, because high voltage is eliminated at the pedestal or wall box while vehicles are not charging.

The EV market is “desperate for a new way to scale, drive revenue and accelerate adoption,” Kennedy said, adding that Atom Power’s device can be used in other industries to shift from analog to digital power delivery.

SK said Atom Power’s core technology was “the primary driver” behind its decision to invest.

The SK group, Korea’s second-largest conglomerate after Samsung, also acquired an additional $50 million stake in Atom Power from earlier investors, making SK the largest outside shareholder.

SK said it intends to expand Atom Power’s business across the U.S. “and ultimately globally.”

Atom Power previously had raised funds from the corporate investment arms of Siemens and ABB, according to investor website PitchBook. The two European industrial giants are key players in EV charging technology and systems.

SK has a multibillion-dollar joint venture with Ford Motor to build EV batteries in Kentucky and Tennessee, and supplies batteries to Volkswagen’s U.S. operation from its Georgia plant.