What Will Billionaire Tran Ba Duong Sell to Raise Over $6 Billion for the High-Speed Rail Project?

THACO’s Proposal for the High-Speed North-South Railway Project

In a letter to shareholders, partners, and employees, THACO’s Chairman of the Board of Directors, Tran Ba Duong, provided insights into the company’s proposed investment in the High-Speed North-South Railway Project. Mr. Duong outlined the capital structure and funding strategies for the initiative.

The total investment for the project, excluding land clearance and compensation costs to be borne by the state, is estimated at VND 1,662,000 billion, or approximately USD 61.35 billion. THACO is committed to exploring cost-saving measures during the feasibility study phase and after the approval of the basic design to ensure a efficient investment while maintaining the project’s objectives.

THACO has proposed the establishment of a project company, with THACO holding a controlling stake of 51%, to take the lead in managing, executing, and operating the project. This demonstrates their dedication to its success.

The project company is responsible for arranging 20% of the total investment, amounting to approximately VND 312,000 billion (or USD 12.27 billion). With their 51% ownership, THACO’s responsibility translates to VND 159,120 billion, or about USD 6.26 billion.

The remaining 80% of the total investment, equivalent to USD 49.08 billion, will be raised from domestic and foreign credit institutions. THACO has proposed a government guarantee and interest rate support for this portion of the funding, with repayment to be managed by the state through a signed financial plan.

Both sources of capital will be disbursed over a 7-year period, commencing once the government hands over the cleared land. THACO’s responsibility for capital arrangement during this period averages VND 22,730 billion per year, ranging from USD 860.8 million to over USD 1 billion annually, primarily through capital increases and stock sales at THACO and its member groups.

Currently, at THACO, Mr. Tran Ba Duong and his family own 72% of the capital, with the remaining distributed among the Jardine Matheson Group (26.6%) and employees (1.4%). To achieve the desired capital structure, THACO plans to sell shares to external investors, aiming for Mr. Duong and his family to hold 51% of the capital. A similar strategy will be employed at THACO’s member groups, where currently, Mr. Duong and his family own 100% of the capital.

Additionally, THACO may utilize a significant portion of its annual post-tax profits (estimated at VND 15,000 billion) to contribute to the project’s funding.

With these strategies, THACO is committed to contributing a minimum of 51% of the capital, amounting to VND 159,120 billion, or approximately USD 6.26 billion, and potentially up to 20% of the total project investment.