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Private placement is a way for a company to raise money without using a rights issue. Why not use a rights issue? Simple lah, with private placement (PP), they can control who gets to buy in. Usually, it's big institutions or sometimes, even friends and family. Some say it's a sneaky way for certain people to get a bigger share, while others get diluted because they weren’t given the chance to buy into the PP.
So, today’s sell-off? Most likely, it's from those who didn’t get to buy the PP. Imagine if Ah Soon buys all the PP at a discount, then sells it to the market at a higher price. He can make a nice profit while also helping the company raise cash. Haha. Today sell off means there is know something people in the market.
Now, why is the company doing the PP? They say it’s for blockchain development, but honestly, the cost is pretty high. Like I said a year ago, they aren’t really blockchain creators, they’re more like resellers. This time, they’re trying to come up with use cases to apply blockchain. Whether those use cases will make money or not, no one knows. So, some shareholders might get nervous and decide to sell.
To me, blockchain is like Excel – it’s just a tool. You can’t sell Excel to a customer who doesn’t even know what they need or how to use it. So, the company needs to create some templates, like financial models, budgeting templates, or AI-powered templates. But again, whether these templates will actually sell, we can’t be sure. Plus, the templates can easily be copied by competitors, so it’s not a guaranteed thing.
Lastly, since the company got so much quarterly earning, why they need to do PP? Are their earnings just for show, imaginary or is it real cash that they can use for dividends or R&D? Why need to inject more capital into cash rich company?
(PS: What happen to NFT? Doge Coin...? many imaginary art and imaginary coins are falling as value retention and safehaven.... Haven't you all heard the news about Biggest crypto heist in history, worth $1.5bn, linked to North Korea hackers??)
Amount
(RM’mil) Expected time frame for utilisation (from the listing date of the Placement Shares)
(1)
Development of blockchain infrastructure in Malaysia
85.00
Within 24 months
(2)
Development of blockchain applications and associated agentic Artificial
Intelligence (“AI”) 225.00 Within 24 months
(3)
Working capital 30.38 Within 24 months (4) Estimated expenses for the
Proposed Private
Placement
7.90
Within 1 month