8i Enterprises Acquisition Corp. (JFK) announced this morning the execution of a share exchange agreement with Diginex Limited, a global blockchain financial services and technology company headquartered in Hong Kong. Upon completion of the transaction, Diginex is anticipated to have an initial enterprise value of approximately $276 million. Post-closing of the combination, JFK will continue its listing on the Nasdaq Capital Market and change its name to “Diginex Limited”.

Additionally, Diginex is headquartered in Hong Kong with a presence in Tokyo, London, Boston, Dubai, Lausanne and Berlin.  Per the press release, the company provides an ecosystem to enable the broader adoption of digital assets across financial markets through three interlocking pillars:

• Advisory – capital markets origination and distribution of securities via digital assets; and broader blockchain solutions for corporate and financial industry institutions, as well as governments
• Markets – a full infrastructure for digital assets exchange trading and custody, and
• Asset Management – providing an accessible and credible on-ramp into digital assets for institutional allocators of capital.

Quick takes: This is a tough one.  There are no comps, no financials, no revenue yet. This all hinges on how you feel about the crypto opportunity.  There are some legitimate names attached with Diginex and they’ve built a decent company infrastructure, but it remains to be seen if they can actually monetize.  Again, right now it’s just an “opportunity”.  This would have been far easier to evaluate if this company were a little further down the road with some contracts already locked in, but unfortunately, there are still a lot of “ifs”.  As a result, this transaction is going to require a lot of explanation and salesmanship on the roadshow.  If they can’t convince investors to buy into the “opportunity”, it’s going to be very difficult to keep shareholders from redeeming.

Transaction Details

Share Exchange

At the effective time of the share exchange, Diginex’s shareholders will receive 20 million ordinary shares of JFK (the “Consideration Shares“), valued at $10.00 per share.

• Two million Consideration Shares will be held in escrow for 12 months after closing of the transaction to satisfy potential indemnification claims under the terms of the agreement.

Lock-up

The Consideration Shares shall be subject to a lock-up agreement for a period of:

• Six months for Sellers holding less than 2.5% of the ordinary shares of the Purchaser post-closing
• 12 months for Sellers holding 2.5% or more of the ordinary shares of Purchaser post-closing

Earnout

Diginex shareholders will be entitled to receive earn-out consideration of an additional five million JFK ordinary shares.

In the event the closing price of the Purchaser Ordinary Shares is equal to or greater than the stock prices set forth below during any five trading days out of any 30 trading day period from and after the Closing until the applicable milestone date set forth below:

Diginex Employee Share Option Plan

• All options held by Diginex option holders under its current employee share option plan, whether vested or unvested, will automatically be cancelled as of the closing of the transaction and in exchange for the cancelled options.  Upon payment of the exercise price of the options, the option holders will receive 4.2 million ordinary shares of JFK, in the aggregate, which will be subject to lock-up agreements for a period of fifteen (15) months following closing of the transaction, and shall be released in three (3) equal installments over a period of six (6) months following the expiration of such lock-up period.

Board Composition

• The board of directors will consist of no more than seven directors, all of whom will be designated by the Sellers (Diginex).

ADVISORS

• Chardan is acting as a financial advisor to JFK
• Loeb and Loeb LLP is acting as legal counsel to JFK.
• Winston & Strawn LLP is acting as legal counsel to Diginex.