- Franklin Madison
Profitable Companies and Security Token Offerings
First posted on LinkedIn June 24, 2019
Established and profitable companies are moving to Security Token Offerings (“STO”) to raise funds as an alternative to the traditional less liquid private capital market.
One of our clients is presenting a unique model. It is a Turkish family office that operates a holding company listed on the Istanbul Stock Exchange. They specialize in renewable and sustainable farming projects. Based on the value proposition of their existing projects and several ones in the pipeline, we ended up with an STO backed by new shares in the holding company. Furthermore, because of their experience and cash flow projections, they are able to guarantee a minimum of 4% in annual dividend, something that is rare in the current STO environment, where ROI is often not mentioned or tied to non-existing revenue. Even though the two first stages are private placement the final stage will be listing the STO on one or more of the new exchanges, which are being established. You can learn more about the company here(www.invest4impact.io) . The STO raise is done out of Malta, as that country has been fast to embrace this new financial instrument and created a clear legal framework to work within.
As the STO landscape is maturing and a secondary market is being established with the clear legal framework, we see many such opportunities for established companies with a long operational history to leverage their knowledge and business to use STO to expand their capital and/or refinance expensive debt. For the investors investing in these more established companies, it is lower risk with well-defined ROI, and unlike placing their money with private capital firms, the market is much more liquid and operates Globally 24/7.
We are working with several other established companies to frame their STO that will provide the company with their capital needs and investors with low-risk and liquid investments.