M&A

Diginex Takes Reverse Merger Route to Go Public

'Backdoor' listings have become a popular way for crypto firms to get into the public markets without the regulatory scrutiny of a traditional IPO.
Matthew HellerJuly 10, 2019

Hong Kong-based Diginex has closed a “reverse merger” deal, becoming the latest cryptocurrency firm to get into the public markets without the regulatory scrutiny of a traditional IPO.

Under the terms of the deal announced on Wednesday, Diginex will exchange shares with 8i Enterprises Acquisition Corp , a publicly-listed special purpose acquisition company. Once the merger is completed, 8i Enterprises will change its name to Diginex Ltd.

Diginex is a blockchain financial services and technology that partners with institutional investors, corporations, and governments to make digital assets more accessible.

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“Diginex has been built to provide the financial services infrastructure required to take digital assets and blockchain technology to the next level of adoption by institutional investors and corporations globally,” CEO Richard Byworth said in a news release.

“We believe that this exciting transaction will enhance our broader market visibility as we further roll out our global platform,” he added.

Reverse mergers allow companies to offer shares to the public without the rigors and regulatory scrutiny of a full initial public offering.

Such deals could help the crypto industry gain greater mainstream acceptance, Reuters reported, noting that the reputation of cryptocurrencies “has been hit hard by fears of price volatility and possible uses for laundering money alongside high-profile hacks and infrastructure failures.”

Earlier this year, crypto exchanges Bithumb and OKCoin  attempted to take over public companies with the aim of achieving “backdoor listings” on stock exchanges in the U.S. and Hong Kong, respectively.

U.S. crypto broker-dealer Voyager Digital, meanwhile, went public in Toronto after buying control of mineral exploration firm UC Resources.

Diginex last month teamed up with FIS, a financial services technology firm, to launch a trading tool aimed at helping investors manage digital asset portfolios. According to the World Economic Forum, digital securities could represent a $13 trillion market opportunity by 2027.

“The execution of the share exchange with Diginex comes as the need for increased regulation, transparency, and traceability around the growing use of digital assets has never been greater,” 8i Enteprises CEO James Tan said.

Photo: Yu Chun Christopher Wong/S3studio/Getty Images