Fineqia International Inc. (CSE:FNQ) is a digital asset business. It makes investments from its own balance sheet, targeting early stage companies; businesses in blockchain, fintech, artificial intelligence and NFTs. Its platform also helps to brings crowd investors lucrative and risk-mitigated opportunities.
The Market Herald recently caught up with Fineqia’s CEO, Bundeep Singh Rangar.
TMH: Who better to ask than yourself, can you please explain further what Fineqia does and what differentiates it over similar companies?
Rangar: Philosophically, Fineqia has a play on the words financial and equality. Its idea is to democratize access to financial products and services. We’ve been in this space involving digital assets for a few years now, and I think for us the differentiator is that we didn’t make maverick moves at a time when everybody was jumping on board because there were “get rich quick” schemes out there. We’ve been really cautious about the way we’ve gone about building the business, and at the same time we’ve learned from both the successes of the early adopters as well as the mistakes they might’ve made and certainly some of the failures.
For us being a follower, in that sense a fast follower, has its benefits because you can improvise and improve upon what you’re seeing in the market and the operating word for us, I think is innovation. We’re looking at innovative new products, building upon what’s already out there. And since we are a stock that’s listed in Canada, we provide liquidity to investors who want to get access and exposure to digital assets, but in a way that they can go in and go out when they need to.
At the same time, being regulated and liquid and listed means that we have a high degree of governance and transparency, which is really important in this market.
TMH: I understand that the total assets under management (AUM) of digital asset ETPs increased 53 per cent worldwide in the year-to-date period. How was this achieved?
Rangar: For us it’s an important market to track as part of the innovation we want to bring is in what’s called the ETP sector. ETPs are “exchange traded products.” Ninety-seven per cent of all ETPs out there are what are commonly known as ETFs or exchange traded funds.
In Europe, you’ll find a version of that, which is ETNs, “exchange traded notes.” They’re quite similar to ETFs except the difference is you’re a loan note holder as opposed to a shareholder, and you have the loans that are collateralized against digital assets. We track this market because we have plans in the space to have innovative exchange traded notes listed in Europe. We have a subsidiary in Lichtenstein, which has the issuing authority for such notes, and we are in the process of doing some pretty encouraging work out there.
Tracking the market’s important, and what we’ve found is that the year-to-date performance of exchange traded products worldwide, where you have some kind of digital asset as a collateral, is up and it’s up 53 per cent, which is 18 per cent above the appreciation of the underlying assets. The underlying assets grew about 45 per cent, and what you found above that is 53 per cent increase of ETPs, which implies an 18 per cent premium. If the asset prices themselves are now going up to the same extent i.e., 53 per cent, then what’s driving that AUM up is capital inflow. So that means investor appetite is increased for such digital assets at a premium to the actual underlying asset itself, and that’s encouraging. That means that there’s more interest in this specific product that’s out there and there’s a number of reasons for that.
TMH: It was made public that the company closed its second tranche of a private placement for more than $300,000. How was the company able to gain this dollar amount at this time?
Rangar: We had targeted 1 million Canadian dollars and we ended up at $1.4 million, which was very encouraging. Very grateful to the investors who have come on board. I think they see us again doing things that we’re doing in this space. Everyone’s looking at the U.S. Bitcoin spot ETF approvals that are fairly imminent and we’ve seen a few rumours around that, but also some solid news around that involving BlackRock or Grayscale or VanEck or some other issuers, and that’s going to be a tipping point for ETPs in general.
Because, like I said, 97 per cent of them are ETFs. They look at us and say, hey, you guys are doing something interesting which is not only extending what is happening and what we see in the States and Canada, but you’re actually coming up with something that’s more innovative and pushes the envelope on what’s out there in the market.
Given that roadmap that we have in terms of what we’re building, investors like the story and that’s why they participated and the story’s not just on the ETF side. We also have a suite of private investments and those have grown in value. We went in early, we went in 2018-2019 and some deals, they’ve done really well despite the market being a little cold these days, they’re still up quite a bit and that gives us a nice net asset value on the company, which is valuable and growing because this is not the end of it. They’re still rising in value, and we expect to get more value out of them over the next few years.
TMH: Regarding the second tranche, where will the funds be allocated from the offering?
Rangar: Part of it is this working capital and part of it is continuing our thesis of making investments in some very inspiring companies. We’ve actually made a few investments over the last few months, small ticket investments that we’re completing. Those will be again in sort of the early-stage web 3.0 space, where we find innovative companies that are differentiated in their offering and they are well-run, well-governed with innovative products.
We want to get in there early because the early bird catches the worm, I suppose, and we’re looking to get in these deals when other people are looking elsewhere or as Warren Buffet said, the market’s a bit fearful and we take his opinions well, and you want to be greedy when the market’s fearful. So, we’re being greedy in getting into deals.
TMH: You mentioned that historically speaking, August reflects historic weakness in the digital asset and capital markets. Looking back, how were you able to navigate this landscape?
Rangar: We used that time for our private placement activities. It was obviously a tougher market, not only because the market’s obviously a bit risk averse but also because summertime people are on holidays.
But despite that, we did a pretty decent job, I think closing an oversubscribed round and generally the markets we saw, of course the biggest rise for example in the ETP world that we were discussing earlier was in Q1. That’s where the overall high performance has come out. The 53 per cent year today is largely because of the increase in Q1. Also Bitcoin, itself, is up above 71 per cent this year. That helps with this story. Even if August was a bit suppressed, and historically September is not the best month but we found September to be great both for digital asset price appreciation and AUM for ETP.
So that gives you an indication of, yes, they may be, let’s go on holiday, move in August, but come September people were back in business and that contrasted previous years.
TMH: Fast forward to last month, the company closed its third and final tranche, growing over the initial goal of $1 million. Why do you think investor interest is so high?
Rangar: I believe that it’s again going in when the market’s low, right? We offered our units, which was a share and an attached warrant at a pretty low price considering the value the company’s building.
I believe a lot of people saw this as an opportunity to kind of buy low, if you may, and in due course, hopefully sell high. We will obviously take our time building what we’re building, but we’re on track to deliver a lot of new innovative products. We have some investments that are, like I mentioned, increased in value. We have some new investments that were due to complete and all that builds up the story of what we’re doing both with private company shares, which have their own trajectory as well as listed instruments, like exchange traded notes, which we plan on issuing in Europe which all … flows to the topco.
What is the management fees from an exchange traded note or the performance fee there? We have plans to get a structured venture fund whereby we’re rolling in our investment portfolio to create a new venture fund that’ll continue to that investment thesis but not just with our balance sheet funds but with limited partners funds because we see such great deal flow, we see innovation and new companies not just in Canada but in the U.K., Europe and in the Middle East.
I just got back from Singapore earlier this summer and we see really cool companies coming from everywhere, and that access to deal flow means we want more capital to deploy because they’ll make great returns for investors.
For us, the story of being able to offer investors the upside from a listed share price that benefits from the investment portfolio, future management fees and current interest, as well as performance fees and management fees from the exchange traded note side, all flowing to the topco means it all flows ultimately to the Fineqia share price.
And that’s what investors are looking at, and they say, “Look, we know this is going to take some time, and we know the macro environment’s not great, but that’s not going to stay there forever.” Do you want to come when the market’s high? Do you want to go when it’s low? Well, they opted for going in when it’s low, which I think is what most smart investors do.
TMH: And before we leave you today, is there any forward-looking information you have for investors?
Rangar: I can’t give obviously too much forward-looking stuff until we are closed for obvious reasons, but I can say that we are in the course of completing some investments, which we’ll be announcing shortly and those are important investments. They’re part of the building blocks, what we’re doing with our venture fund.
It continues our thesis of what we’ve done so far. We’re looking at some very interesting things also in tokenization of real-world assets because you can see a lot of movement in that regard. There’s a lot of established funds from Hamilton Lane and various other ones out there that are looking at the tokenization of real-world assets, and that’s a growing industry. We are at the forefront of that, and we’ve got some really cool things we’re working on, which should unfold in the months ahead.
To stay up to date on the company, head to its website at fineqia.com or track it down on the CSE under the symbol FNQ.
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