The current economic landscape has placed several impediments in the way of funding operations and acquisitions. Understandably traditional investors are cautiously awaiting the storm to blow over before proceeding with pending opportunities. Financial intermediaries are responding to the conservativeness of their traditional source of funds and holding back with proceeding with transactions.
Despite this lack lustre approach to transactions, money is still seeking channels through which it can funnel itself to opportunities and these opportunities are still there. Corporates still have a need to acquire more infrastructure and in some cases acquire other corporates.
There are a set of advisors that these seem to have little time or resources to take on new transactions. Once approached their response is we are booked up for the next couple of months. These are ICO advisors. These advisors appear to be where some monies have found a channel through which to meet opportunities. What is an ICO (initial coin offering)? An ICO is a listing of digital assets on a crypto exchange. Very much similar to the traditional IPO but decentralised, without any intermediaries, and relies upon social media type of infrastructure as a means to market the digitised securities.
Pretty much anything can be digitised or as I prefer to refer to it, tokenized. Once tokenized the former brick and mortar asset can now be listed on a crypto exchange. We come in at the phase of conducting the due diligence on the brick and mortar asset or opportunity which is necessary to identify its value ahead of tokenization and subsequent listing at a particular price per token on the exchange.
Corporates can explore this blossoming approach to crowd funding acquisition of assets or corporates seeing as both of the aforementioned can be digitised using tokenization. This particular approach lends itself well to assets or opportunities which can be monitored using iOT (internet of things). The following lend themselves to iOT infrastructure: a QSR (Quick Service Restaurant); an upstream LNG player providing domestic supply; a logistic company; an agriculture based production company and a property development firm. These are just five of thousands of operations that now lend themselves to iOT and hence to wooing funding via digitisation of their assets.
Regulators' core concern with this approach to corporate finance is the need for such transaction owners to do their KYC on investors and for such tokenized securities more importantly to be registered for monitoring purposes.
Please contact us if you would like some help exploring due diligence and drafting whitepapers for tokenization and ICO listing.
MLS (Managed Legal Services) by Oladipo Opanubi specialises in Due Diligence for M&A and Financing transactions. We utilise technology such as VDRs, AI, and Deep Dive analytics to get the job done. Though we emerged from a Law Firm most of our resources are technologists supported by subject matter experts.