- Diginex will go public via a backdoor listing
- Reverse merger is the most expedient way for private companies to go public
- Diginex aims to help investors manage their digital asset portfolios
Hong Kong-based blockchain and cryptocurrency firm Diginex is slated to go public on NASDAQ. The listing in the United States results from a reverse merger deal. According to a Bloomberg report today, Diginex inked a deal with a special purpose acquisition company 8i Enterprise Acquisition Corp. The deal with 8i enables Diginex to go public via a backdoor listing and, as a result, avoids the rigorous regulatory process of formal Initial Public Offering (IPO) processes. However, the deal still requires approval from the United States Securities and Exchange Commission (SEC).
NASDAQ exposure to crypto
According to the Bloomberg story, the deal is valued at about $276 million including debt and shareholders are in line to receive 20 million ordinary shares of 8i at the value of $10 each. The initiative by Diginex is based on the belief that financial institutions and investors will increase their exposure to cryptocurrencies and the blockchain technology on which they are built. This is despite the crypto winter that erased the value of most cryptocurrencies during the last two years.
A reverse takeover or reverse merger takeover (reverse IPO) is the acquisition of a public company by a private company so that the private company can bypass the lengthy and complex process of going public. The transaction typically requires a reorganization of capitalization of the acquiring company. Sometimes, conversely, the private company is bought by the public listed company through an asset swap and share issue.
Reverse mergers the easiest way to get onto big exchanges
Reverse mergers are often the most beneficial and cost-efficient way for private companies that hold shares that are not available to the public to begin trading on a public stock exchange. Prior to the rise in popularity of reverse mergers, the vast majority of public companies were created through the initial public offering process.
Earlier this year, cryptocurrency exchange Bithumb was also looking to go public on NASDAQ through a reverse merger deal, when it signed a letter of intent with Blockchain Industries. Mike Novogratz’ Galaxy Digital also took a reverse merger route to get listed on Canada’s TSX Venture Exchange. Last month, Diginex teamed up with FIS, a financial services technology firm, to launch a trading tool aimed to help investors manage digital asset portfolios, the firm says on its website.