Marlton Partners, a privately held investment firm based in Chicago, has asked Grayscale Investments to accept the modified Dutch auction offer for GBTC shares. According to Marlton, such a takeover offer would “significantly limit – if not eliminate” the discount on net asset value (NAV). This in turn provides shareholders with confidence “in the sponsor’s ability to manage the fund’s rebate”.
Billions in depreciation
Despite GBTC’s competitive advantage as the world’s largest Bitcoin fund, GBTC shares continue to trade “at a significant discount to net asset value”. According to Marlton Partners, this discount to net asset value “currently represents a loss of over $ 3.1 billion in value for trust shareholders”.
Meanwhile in one open letter James C. Elbaor, executive director of Marlton Partners, directed to the management of Grayscale Investments, insists that current efforts to remove the discount have proven insufficient. To support this argument, Elbaor refers to the latest edition of the Digital Currency Group (DCG) announcement of plans to purchase GBTC stock valued at up to $ 250 million. In the letter Elbaor said:
As you admit in your press release announcing the transaction, while this promotion is helpful, it does not oblige DCG to purchase a specific number of shares during any given period and is subject to change or discontinuation at any time without notice.
According to Elbaor, the market’s reaction to DCG’s announcement already shows the ineffectiveness of such an authorized purchase. At the time of writing, the discount on GBTC stock had increased to 11.45%.
The modified Dutch auction offer
Meanwhile, Elbaor claims that Marlton’s proposed takeover bid system “allows shareholders to sell their shares at a certain price”. He says this can be done “within a certain time window for an offered price at a premium on the market price and (depending on a minimum or maximum number of shares sold”).
In addition, Executive Member Grayscale states that “A clear capital allocation plan through a takeover bid in GBTC will make you and GBTC the only digital currency asset manager to create shareholder value that earns a 2% management fee on top of exposure to digital currencies alone . “
While Elbaor expects these talks (with Grayscale) to be productive, he insists that Marlton Partners “reserve all rights to take further steps to protect our investments and those of other shareholders”.
Do you agree to an auction offer canceling the discount on GBTC shares? Let us know what you think in the comments section below.
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