This week’s Aquis Stock Exchange pick is the Gibraltar-based fintech, Valereum [AQSE:VLRM], which focuses on unlocking capital and creating value in tokenized digital markets.
But what are tokenized digital markets? Well, a tokenized digital market uses blockchain technology, a digital ledger of transactions, to represent assets as digital tokens. This process, known as tokenization, allows for the digital representation of virtually any asset, from physical goods like real estate and art to financial instruments like stocks and bonds.
Valereum, like many other firms in this space, uses blockchain to convert rights to an asset into a digital token, that is then stored and represents ownership or rights to the underlying asset. Blockchain provides a safe and secure, transparent and decentralized ledger for recording transactions, enabling an efficient and secure transfer of tokenized assets.
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The tokens can be bought, sold and traded on digital platforms, and tokenization can make illiquid assets such as real estate more liquid, enabling fractional ownership of an asset, which can be easily traded.
Valereum operates as both a technology provider and a marketplace operator, aiming to become a global leader in the rapidly developing sector of tokenized digital assets. In January 2024, Valereum acquired the GSX Group, including its GATENet technology. This acquisition led to the adoption of the GATE Token as the sole utility token within Valereum’s ecosystem, enhancing its capabilities in the digital asset space.
Name-changes and switch of listing
Originally known as PCG Entertainment, an AIM-listed online media and entertainment group, in 2019 Valereum delisted from AIM and joined Aquis (back when it was called NEX Exchange). It changed names to Valereum Blockchain, refocusing on blockchain opportunities, and renamed once more in 2022, to Valereum.
The company has been trying to build up its cash pile. It had agreed a £2m cash injection in December, from investment manager Blue Sky Vision LLC. However, the company announced last month that Blue Sky had declined to take up the £2m subscription, but it was: “in negotiations with another entity to take up this subscription as part of the wider ongoing discussions.”
Valereum agrees incoming investment
However, later in the month Valereum said that it had agreed a Head of Terms agreement for £19m capital investment from DMC Markets and a further £1m from a UK-based institutional investor. The proceeds of the fund-raise will be used to make four strategic investments, to provide working capital to support the investments and Valereum growth plans, and to fund and accelerate the rollout of its tokenization and digital asset services.
The company aims to fund the acquisition of minority interests in four complementary strategic assets which have been sourced by DMC. When the deals are sealed Valereum will have greater presence across Australasia, Europe, North America and South America, as well as accelerating its provision of Web3, Tokenization, Defi, Asset Securitization and Blockchain solutions. However, the deal was supposed to close last Tuesday (4th March), but had been extended and was still not closed when The Armchair Trader went to press.
The company’s strategic initiatives for 2024 to 2025 include developing innovative solutions that combine proprietary technology with external partnerships. These initiatives aim to support the lifecycle of tokenized digital assets across various asset classes and marketplaces, positioning Valereum at the forefront of the evolving digital finance landscape.
Although Valereum is still in the foothills of growth, its momentum seems to be trending in the right direction. In its last results, for the six-months to end-June, the company turned a half-year £243,000 loss in 2023 into a £322,000 half-year profit for 2024, on the back of a switch from negative earnings of £70,000 to positive EBITDA of £873,000. The company also reversed £384,000 debt into £47,000 surplus cash year-on-year.
The company’s shares opened the week at 20.5p, up 331% from this time last year. The company has a market cap of £36.3m.
Valereum’s journey from an online entertainment firm to a key player in the tokenized digital asset market highlights its adaptability and ambition. While it still faces challenges, including securing funding and completing strategic acquisitions, the company’s financial turnaround and expanding global footprint suggest a promising trajectory. With a focus on Web3, tokenization, and blockchain solutions, Valereum is positioning itself at the forefront of the digital finance revolution — making it a stock to watch in the evolving fintech landscape.
