Singapore-sponsored 8i enters into share exchange agreement with Diginex

Singapore

8i Enterprises Acquisition Corp, the first Singapore-sponsored "blank cheque" company listed on Nasdaq, has entered into a share exchange agreement with a Hong Kong-based global blockchain financial services and technology company, Diginex Ltd.

Upon completion of the transaction, Diginex is expected to have an initial enterprise value of about US$276 million.

8i Enterprises (Nasdaq ticker JFK) was set up by its Singaporean chief executive, James Mengdong Tan, as the first of a series of special purpose acquisition companies (SPACs). It raised US$50 million in its listing on Nasdaq in March.

A SPAC is set up for the purpose of acquiring an operating business that will hopefully prove rewarding for investors. It is also called a "blank cheque" company as investors hand over capital by subscribing for a SPAC initial public offer, even though they do not know at the outset which company will be acquired. For the acquisition target, merging with a SPAC gives it a public listing via a reverse takeover, which is more efficient and less costly than an initial public offer.

Diginex sets out to build an ecosystem and infrastructure for the broader adoption of digital assets, leveraging on blockchain technology. Its strategy is three-pronged. One focus is on capital markets advisory on the origination and distribution of securities via digital assets or tokens, as well as advisory on broader blockchain solutions for corporate and financial institutions.

A second pillar is markets: it sets out to establish infrastructure for exchange trading and custody of digital assets. The third is asset management, where it aims to provide an accessible and credible avenue into digital assets for institutional asset allocators.

Under the share exchange agreement, 8i will acquire Diginex, and continue to be listed on Nasdaq. It will change its name to Diginex Limited upon completion of the share exchange.

Diginex shareholders will receive 20 million ordinary shares of 8i valued at US$10 per share. Two million of the ordinary shares will be held in escrow for 12 months after the close of the transaction to satisfy potential indemnification claims.

In addition, Diginex shareholders will be entitled to receive an earn-out or additional consideration of 5 million 8i ordinary shares, subject to Diginex achieving price thresholds of US$15, US$20 and US$30 over the next three years.

All options held by Diginex option holders under its current employee share option plan will be automatically cancelled at the close of the transaction. In exchange for the cancelled options and upon payment of the exercise price of the options, the option holders will receive 4.2 million 8i ordinary shares, which will be subject to lock-up agreements for 15 months. The shares will be released in three equal installments over six months, following the expiry of the lock-up period.

Mr Tan said the share exchange agreement with Diginex comes at a time when the need for increased regulation, transparency and traceability around digital assets has never been greater. "After a thorough review of multiple opportunities in this industry, we have determined that Diginex is the trusted operator of choice with the advanced technology infrastructure necessary to meet the standards of institutional investors and partners.

"With their thoughtful ecosystem approach, Diginex is well positioned to continue unlocking opportunities and driving institutional adoption of blockchain technologies.''

Diginex chairman Miles Pelham said that as a Nasdaq-listed company upon completion of the transaction, Diginex will continue to pursue its vision of "leveraging blockchain technology for both social good and the disruption of financial intermediaries".

"Our seasoned and diverse team of financial services professionals, compliance experts and technologists are dedicated to regulatory compliance and transparency, standards which are essential to furthering our goal of growing the global propagation of digital assets.''

Diginex has already made strides in a number of aspects. Diginex Asset Management, for instance, has secured an asset management licence from Hong Kong's Securities and Futures Commission.