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Y Ventures cuts majority stake in initial coin offering JV, quits management and operations

E-COMMERCE firm Y Ventures Group is slashing its planned stake in a cryptocurrency joint venture to a minority position, citing factors such as compliance requirements and accounting uncertainty over an initial coin offering (ICO).

It will have a 20 per cent interest in the tie-up with Arke Blockchain Engineering, the board said on Friday, after a variation agreement was made to the joint-venture deal unveiled in July. This is down from the majority stake of 60 per cent that was originally announced.

The joint venture was for the partners to set up a cross-border e-commerce platform called AORA, as well as utility tokens called AORA Coins, priced at 20 US cents apiece in an ICO that closes on Nov 30.

Y Ventures' board has now said that compliance costs for the joint-venture company will be "significantly higher" if it is the subsidiary of a Singapore-listed company, in a scenario that "also requires the management to divert more time and resources than initially considered" to compliance.

The board also cited "the lack of certainty on various issues" related to accounting standards and financial statements when it comes to AORA Coins and the financial impact of an ICO.

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It said that the change in joint-venture shareholding "will enable the AORA Platform to pursue growth opportunities in a more nimble and agile manner", and added that the joint-venture company will still be looking into working with Singapore Post (SingPost) on the platform and logistics technology.

AORA, which is slated for launch in the first half of 2019, is being developed in partnership with SingPost.

Y Ventures will get S$400,000 in cash from Arke for its lowered stake, with the right and option to require Arke to buy it out at any time within five years from either the ICO's close or March 31, 2019, said the board on Friday.

Under the variation agreement, Arke - which, according to records, is owned by a British Virgin Islands-registered firm called Arke Holdings - will own 80 per cent of the joint-venture company and will be entitled to appoint all of its directors. Y Ventures will no longer be involved in the management and operations of the joint-venture company, the proposed ICO and the AORA platform, it added.

Y Ventures and Arke have exclusive rights to use and exploit data from the AORA platform at no cost for two years from launch. Y Ventures also has first right of refusal to provide data analytics services for the joint venture, "at fees and on terms which are no less favourable than that offered to third parties".

The board said that Y Ventures expects to record an accounting gain from the reduction in its stake.

Y Ventures added 2.5 Singapore cents or 9.26 per cent to S$0.295 before the announcement.

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