Globacap starts first equity issuance in public blockchain with FCA oversight

Globacap starts first equity issuance in public blockchain with FCA oversight
04.07.2018 07:25 am

Globacap starts first equity issuance in public blockchain with FCA oversight

Blockchain

Transformative new platform will allow SMEs efficient access to a significantly wider pool of global capital

Globacap aims to take the ICO form of capital raising into the regulated space, and into the mainstream, through issuance of equity and debt instruments in Blockchain

London, 3 July, 2018: Globacap, a digital capital-raising platform, is offering the first issuance of equity in public blockchain with oversight from the UK’s financial regulatory body, the Financial Conduct Authority (FCA). The capital raising will provide proof of concept for Globacap’s transformative new platform that will help start-ups and SMEs efficiently access a significantly wider pool of global capital.

Globacap is one of a select few companies to take part in the FCA’s six-monthly regulatory sandbox that oversees product testing in a customised regulatory environment. As part of the sandbox cohort four, Globacap will perform an end-to-end capital raising on its own platform, which will involve issuing part of its own equity as an ERC-compatible token, in its Digital Security Offering (DSO).

The “ICO” form of capital raising has grown significantly in importance in recent years, with over $4 billion of capital raised through this means in 2017. However, progress is currently limited by the lack of trust and sophistication in the system, where investors currently receive little in return for their ICO investment.

Globacap and its legal advisors, Hogan Lovells, have been working together to create a public blockchain token that forms a legal shareholding within UK company and securities law. The Hogan Lovells team is being led by corporate transactional partner, Richard Diffenthal, and financial services regulatory partner, Michael Thomas.

Globacap (GCAP) tokens are ordinary shares, with token holders having the same voting and dividend entitlements as existing shareholders. Fifteen million GCAP tokens will be issued in the DSO. Investors are required to register in order to participate.

The Platform

The Globacap Platform, to be officially launched later this year, will facilitate DSOs from start to finish, allowing businesses to raise capital from a global audience while managing all regulatory and compliance aspects. Institutional and retail investors gain access to opportunities, invest using a range of crypto and fiat currencies, and benefit from more transparent valuation and post-issuance liquidity. The platform incorporates automated due diligence processes and custom checks to mitigate regulatory AML concerns over secondary market transfers.

Post-issuance services are also automated, including dividend distributions and coupon payments, electronic shareholder voting, investor communications, shareholder registry management and regulatory reporting.

The Importance of SMEs

SMEs form a vital part of the European economy and are all too often overlooked. In 2017 across Europe, SMEs accounted for 67% (90 million people) of overall private sector employment and 57% of value added (€3.9 trillion).

An ECB task force estimated that 36% of European SMEs could not get a bank loan in 2016, while many more ruled out bank loans entirely due to prohibitively high interest rates. In an attempt to fill this void, nearly $700bn of direct lending has been channelled to SMEs since 2008 from investment funds, however, much of that has gone to SMEs at the larger end of the spectrum.

Globacap seeks to bridge this gap through providing a means for SMEs to access capital on a global scale, whilst affording both institutional and retail investors the full rights associated with equity and debt securities.

Myles Milston, CEO and co-founder of Globacap, commented:

“This is transformative to the securities industry, paving the way for small and mid-sized businesses to more efficiently access a wider pool of global capital. The Innovate team at the FCA have been pivotal in this milestone, allowing us a quicker route to launch our proof of concept while having regulatory oversight.”

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