ComfortDelGro enters deal to divest Vietnam Taxi stake

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ComfortDelGro’s wholly owned subsidiary ComfortDelGro S.E. Asia has entered a deal to sell its entire 70 percent stake in Vietnam Taxi Co. Ltd. (VTCL) to Helios Service and Investment, according to a filing to SGX Tuesday.

The consideration for the deal is 55 billion Vietnamese dong, or around S$3.26 million, with the figure determined after considering the book value and net tangible asset value of VCTL, which is in the taxi business, the filing said.

ComfortDelGro said the deal isn’t expected to have a material impact on the net tangible assets or earnings per share of the company for the financial year ending 31 December.

ComfortDelGro’s annual report for 2020, dated 26 March 2021, had said the company would likely exit the Vietnam business soon.

“The taxi industry in Ho Chi Minh City is performing poorly because there is quite simply a gross oversupply of vehicles. Together with Private Hire Vehicles which have flooded the market, the number of vehicles has quadrupled in the last five years,” ComfortDelGro said in the annual report. “Taxi fares are regulated and fixed while private hire fares are dynamic.”

The annual report said the company has an operating fleet size of 163 in Ho Chi Minh City.

For January-to-June period, ComfortDelGro reported revenue from Vietnam fell to S$500,000 from S$700,000 in the year-ago period. That compared with revenue of S$7.6 million for 2016 from Vietnam, falling to just S$1.4 million in 2020, the annual report said.

Vietnam operations posted operating losses for 2018-2020, the annual report said.

Ho Chi Minh City, where Vinataxi operates, was one of the most severely impacted localities by the Covid-19 pandemic, with taxi trips dropping by more than 50 percent and Vinataxi reducing its rental rates, and suspending operations during lockdown, the annual report said.

Vietnam Taxi, or Vinataxi, was incorporated in early 2003 and has a fleet of nearly 300 taxis, according to a now-disabled page of ComfortDelGro’s website.

According to Vinataxi’s website, Vinataxi was established in 1992 by Tecobest Investment (Hong Kong) and Tracodi, and in 2003, a joint venture was formed with ComfortDelGro and Tracodi, under Vietnam’s Ministry of Transport.