DigitalX flags $1.64m M&A deal tied to its regtech platform for director trades
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Late last year, crypto-adjacent fintech DigitalX (ASX:DCC) flagged the launch of its Drawbridge platform — a digital compliance tool to help facilitate director shares trades.
And this morning the company announced a follow-up deal tied to the same strategy, with the acquisition of trading platform Sell My Shares in a $1.64m cash transaction.
DCC said it plans to integrate the Sell My Shares software to “accelerate the commercial development of its Drawbridge product”.
Shares in DigitalX got a 7.5% bump in morning trade to climb back above 7c.
The crypto-adjacent stock — which also runs a funds management platform and holds 216 Bitcoin on its balance sheet — is off its mid-year lows.
However, it hasn’t climbed back to its 12-month highs above 11c, reached in November 2020 and February 2021.
In launching its Drawbridge platform, DCC said over 10,000 director interest notices are lodged annually with the ASX — often with manual errors.
The company said it’s spent 2021 on-boarding customers through the Drawbridge app, with the aim of establishing a standardised process for director trades.
DCC is targeting listed companies as customers, where employees of those companies can use the platform to buy and sell shares with the necessary disclosure and compliance obligations while also reducing errors.
With its acquisition, DigitalX plans to integrate Sell My Shares’ backend trade execution systems into the Drawbridge app.
The company said that Sell My Shares has executed $300m worth of shares trades for over 40,000 Australian customers.
The acquisition deal follows on from an MoU the two companies signed back in February.
Upon further review, DCC said it identified “a number of additional growth opportunities through the development of an expanded offering to its existing channel of customers”, resulting in its decision to make an acquisition offer.
The company said it plans to drive further growth in the Sell My Shares platform by increasing customer conversion rates, and removing costs that are currently duplicated on the DigitalX platform.
DigitalX is building its Drawbridge platform to work in line with the introduction of the ASX’s new blockchain-based clearing and settlement system, which is now on track for completion by 2023.
DCC said Sell My Shares currently receives “many customer requests for adjacent share market services, such as finding lost shares and liquidating assets from deceased estates”.
“These and other highly process-driven areas of securities trading are set to benefit from the improved capabilities of the ASX Distributed Ledger (DLT) system, providing a strong base from which to grow new product offerings,” the company said.