There are different ways of entering the market and gain public status and many choose the one selected by Diginex. This is a merger with a Nasdaq-listed public company. This is the fastest and the most reliable way. Not without its drawbacks such as loss of independence because the company is losing its name to take the name of the private company.
Diginex shareholders approved a merger with NASDAQ-listed 8i. The parties expect the deal to be closed by the end of September. Diginex Securities will be traded under the ticker EQOS. The operator of the EQUOS.IO, a well-known crypto-derivatives platform – Hong Kong company Diginex – has officially announced its merger with the public company 8i Enterprises AcquisitionCorp. Shareholders approved the deal, which is a basis of Diginex’s plan to enter the US stock market.
The fact that Diginex plans to be listed on the NASDAQ stock exchange through the reverse merger of the Singapore 8i became known in July last year. The deal was expected to close in March 2020, but due to the collapse of stock markets, the merger had to be postponed.
The company had to re-apply to the US Securities and Exchange Commission (SEC) – in June Diginex received regulatory approval. Then, in an interview with Bloomberg, CEO Richard Byworth said that the re-registration on NASDAQ should take place on September 20-23.
Byworth does not back down on his words. Speaking with Coindesk, he noted that the approval from shareholders and regulators is a “milestone” in the listing process. According to him, all parties to the process expect the deal to be closed by the end of September. Diginex shares are expected to trade on the NASDAQ under the ticker EQOS.
Why the deal is interesting
A reverse merger is a method of gaining public status in which a private company merges with a so-called shell company, which is already listed on the stock market. As a result of this merger, the owners of the private company gain control over the shell company. The latter, in turn, changes its name to the name of a private company, as it was mentioned above.
Among blockchain companies, this method of entering the stock market is becoming more and more popular, and Mike Novogratz’s cryptocurrency bank Galaxy Digital became a pioneer here – in early 2018, he acquired the Canadian pharmaceutical company Bradmer Pharmaceuticals.
The deal between Diginex and 8i is interesting primarily because the latter is a so-called SPAC (a special purpose acquisition company), that is, a company created for the purpose of merging with another private company that wants to obtain public status, bypassing the costly IPO procedure).
SPAC does not operate and does not even have assets. Investors, investing in the shares of such an organization, are de facto buying air, which is why their IPO is often referred to as “blank-check”. However, seemingly useless securities in the long term can bring good profits if SPAC management succeeds in negotiating a merger with a successful private company.
Note that Deginex is not the only blockchain company that has decided to use the SPAC merger to enter the stock market. For example, crypto-credit startup BlockFi is also planning to be listed on one of the stock exchanges through a reverse merger of SPAC.