Ideanomics (NASDAQ: IDEX) (“Ideanomics” or the “Company”), a global Fintech and AI catalyst for transformative industries, is pleased to announce it has acquired an additional 71.7% ownership in Delaware Board of Trade Holdings, Inc (“DBOT”), making Ideanomics the largest shareholder with 98.4%. This acquisition, valued at over US $18 million, signifies that Ideanomics is ready to bridge capital markets, advisory for digital offerings, and better transparency for a range of industry stakeholders.
The Delaware Board of Trade Holdings Inc. operates three companies: (i) DBOT ATS LLC, their SEC recognized Alternative Trading System; (ii) DBOT Issuer Services LLC, focused on setting and maintaining issuer standards, as well as the provision of issuer services to DBOT designated issuers; and (iii) DBOT Technology Services LLC, focused on the provision of market data and marketplace connectivity.
“We are in the early stages of a transformation in the global debt markets. Companies in all points of their lifecycle; seed, growth, and maturing revenue, are seeking to raise debt capital in a regulatory compliant manner to provide capital for growth and liquidity. DBOT is well positioned to provide the platform and advisory services for those companies and their liquidity needs, in addition to their current over-the-counter listings business,” said Alf Poor, CEO of Ideanomics. “They are a part of our strategic vision of a regulatory compliant ecosystem of regulated ATSs and exchanges which will facilitate the trading of debt on a global scale. We’ve been working with John Wallace, Chairman of DBOT, and the team for close to 18 months now and, coupled with our asset-backed debt-based deal origination capabilities, we believe DBOT can play a significant role as part of the next generation of a truly connected global capital markets ecosystem for corporations and their shareholders.”
The global debt market hovered around US $243 trillion globally at the end of 2018, more than 3x global GDP. According to Bank for International Settlements (BIS), the global bond market outstanding grew from US $73 trillion in 2008 to US $100 trillion in 2017. This represents a compounded annual growth rate of 3.1% in a decade, outpacing the global GDP growth rate of 2.4% in the same time period. It is worth noting that 36.1% of the growth in this period was contributed by issuance originated in China and Asia where assets have been formed from real estate, to lease financing, to government financed projects, to corporate debt but completely lacking the financial market product conversion. Asiaclaims debt-based fund raising is 2-4% of the market versus 75% in the US.
Since its initial investment in DBOT, Ideanomics has witnessed the growth and value of providing access to capital markets, in addition the need to integrate technologies such as artificial intelligence to truly reduce inefficiencies and risk, and other technologies to fractionalize debt products and facilitate their trading.
“We are very excited to be part of the Ideanomics family, to leverage their technologies, and monetize their strategic relationships, both domestically and internationally,” said John Wallace, Chairman of the Board at DBOT. “In addition to increasing our market presence for our core OTC offerings, this deal allows us to execute on our vision and strategy at an accelerated pace through the additional deal flow and resources that Ideanomics brings to the table. As digital securities offerings, fractionalization, and tokenization become more the norm, DBOT will be well positioned to take advantage of this in a regulatory compliant manner and this will translate into greater throughput and profitability for both our business and that of Ideanomics.”
We believe that DBOT, with the support of Ideanomics, can lead the global digital revolution involving debt-based securities offering and trading, fulfilling such needs of both lack of products and lack of trading of existing products.
DBOT ATS LLC, operates an SEC recognized Alternative Trading System that facilitates transactions of secondary trading of corporate equity securities, including ETFs, REITs, and ADRs. Secondary trading of private company stock, restricted stock, unlisted or unregistered warrants, convertible debt, preferred instruments, employee stock options, and 144A stock; and Operate a Funding Portal to allow issuers to offer Regulations A+ and D offerings.
In the wake of industry news such as TD Ameritrade’s recent announcement to begin 24-hour trading on selected ETFs, or SeedInvest, the equity crowdfunding platform owned by crypto-friendly payment giant Circle, recent Finra approval to allow its users to trade startup shares via its accreditation as an Alternative Trading System; is proof that the ecosystem has recognized that creating new capital formation options for startups and growth companies, and giving average retail investors the opportunity to invest directly into innovative private companies, is a growing trend.
Ideanomics has already started its global debt ecosystem network building in Asia by entering into a MOU with a major exchange to explore debt trading platforms, establish teams, and partnerships in China mainland Hong Kong, Singapore, and Vietnam. Similar partnership conversations are underway in Europe and the Middle East.
Any intended change to the status of DBOT will be in compliance with NASD Rule 1017 – Application for Approval of Change in Ownership, Control, or Business Operations.