CoinShares goes public on NASDAQ, Europe's first encryption stock valued at $1.2 billion.

Europe's largest cryptocurrency asset management company CoinShares is planning to go public on the NASDAQ through a merger with a special purpose acquisition company (SPAC), becoming the first European Web3 company to enter the US capital market. This transaction not only means that CoinShares will be delisted from NASDAQ Stockholm but also marks the official entry of European cryptocurrency asset management institutions into the US domestic market.

Transaction Details and Valuation

CoinShares will merge with Vine Hill Capital Investment Corp, which is listed in the US, and the newly established Odysseus Holdings Limited. The post-merger company is valued at approximately $1.2 billion, representing a premium of nearly 37% over its European stock market valuation of about $877 million.

After going public, CoinShares will become the first European-based Web3 asset management company in the U.S. capital market, thereby expanding its business footprint in the U.S.

The Transformation Journey from Commodities to Crypto Asset Management Giants

CoinShares was founded in 1998 as Global Advisors by former JPMorgan energy trading head Danny Masters and commodities strategist Russell Newton.

In 2014, the company fully transitioned from commodities to digital assets, launching Europe's first regulated Bitcoin investment fund, and in 2016 it was renamed CoinShares.

Subsequently, CoinShares acquired XBT Provider and launched the world's first Bitcoin ETP listed on a regulated exchange, which was listed in Sweden in 2021, becoming the world's second publicly listed Web3 company.

Asset Management Scale and Business Landscape

As of 2024, CoinShares' assets under management (AUM) have exceeded $8 billion, with a market share of 34% in the Europe, Middle East and Africa (EMEA) region, ranking fourth globally (behind BlackRock, Grayscale, and Fidelity).

Its product line covers various tokens such as Bitcoin, Ethereum, LTC, XRP, LINK, UNI, etc., and in early 2024, it acquired the Bitcoin spot ETF issuer Valkyrie, further entering the U.S. ETF market.

Financial Performance: Stability with Concerns

(Source: CoinShares)

Q1 2024: Revenue of 39.958 million USD (year-on-year decrease of 15.88%), EBITDA profit margin of 75%, asset management business revenue increased by 20.8% year-on-year, but proprietary investment business incurred a loss of 1.519 million USD.

Q2 2024: Revenue of $41.519 million (quarterly growth of 3.8%, year-on-year growth of 258.3%), EBITDA profit margin decreased to 63%, asset management business revenue increased by 1.6% quarter-on-quarter, but profit decreased by 10.3% year-on-year.

Although asset management income is steadily increasing, the capital market infrastructure and proprietary investment business are highly volatile, and in Q2, there was a net outflow of $126 million in XBT products, indicating that its core business still faces pressure on profitability.

Challenges and Opportunities Coexist

Challenge:

If U.S. domestic asset management giants (such as BlackRock and Fidelity) accelerate their expansion into the European market, CoinShares' regional advantages may be eroded.

If the SEC approves more cryptocurrency ETFs, competition will intensify, and CoinShares has not yet established a moat in the US market.

Opportunity:

A backdoor listing can quickly enter the US Capital Market and attract more attention from institutional investors.

The Valkyrie ETF acquisition lays the foundation for its presence in the U.S. ETF market. If the inflows for Bitcoin and Ethereum ETFs continue, the AUM is expected to expand.

Conclusion

CoinShares' reverse merger to land on NASDAQ marks a milestone for the European cryptocurrency asset management industry and serves as a litmus test for its challenge in the U.S. market. The valuation premium of 37% reflects the market's expectations for its cross-border expansion, but whether its stock price and market value can continue to rise in the future will still depend on the growth rate of its asset management business, the competitive moat in non-U.S. markets, and whether it can carve out a share in the U.S. ETF battlefield.