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Canaan Inc., a China-based Bitcoin mining hardware manufacturer, has just concluded its initial public offering (IPO), selling a total of 10 million American depository shares at $9 each to raise a combined sum of $90 million—this is the lowest end of the $90-110 million range plotted for the IPO.
Canaan Creative initially filed with the U.S. Securities and Exchange Commission (SEC) with ambitions to raise as much as $400 million back in October. However, this valuation was slashed by three-quarters, down to $100 million, after lead bookrunner Credit Suisse Group AG (CS) cut ties with the company, allegedly due to concerns that the IPO was unlikely to receive sufficient buys.
Regardless, the recent offering was led by Citigroup Inc., China Renaissance Holdings Ltd. and CMB International Capital Ltd, which were also named as underwriters on the initial filing.
An opportunity for equity
Prior to the offering, Canaan co-founders Jiaxuan Li and Nangeng Zhang owned approximately 16% of ordinary shares each, while principal shareholders included Ouroboros Ltd and Flueqel Ltd—both of which approx 16% of shares each.
As a public company, equity investors will now be able to acquire a stake in Canaan Inc, which essentially gives them some exposure to cryptocurrency markets without needing to actually invest in, or store cryptocurrencies directly. This avoids the volatility associated with cryptocurrencies, and gives speculators a chance to invest in the ASIC industry, which Canaan predicts will grow at a Compound annual growth rate (CAGR) of 15.8% between now and 2023.
For better or for worse, this also gives investors a say in how the company moves forward, with shareholders being given the opportunity to cast their vote during corporate elections and at crucial decision points in the company's operations.
According to the filing, each American depository share represents 15 class A ordinary shares and entities the shareholder to 15 votes. The IPO filing also notes that the company will issue class B shares, 100% of which will be owned by Canaan CEO Nangeng Zhang.
So far, Canaan has received only praise for its successful IPO, with Dovey Wan, a founding partner at cryptocurrency investment firm Primitive Ventures calling Canaan's success "a big milestone for the whole industry [regardless of] the current market climate." This view is also echoed by Daryl Snyder, the CEO of crypto loans platform Confidebat, who praised Canaan for its success.
Next up, Bitmain?
With the success of Canaan, other companies working in the blockchain technology industry might now be prompted to consider an IPO of their own. Earlier this year, rival ASIC manufacturer Bitmain also sought to launch its own IPO on the Hong Kong Stock Exchange, but this fell flat after its IPO application failed to gain approval from regulators.
Despite this, Bitmain confidentially filed for an IPO with the SEC back in late October. With a market share of around 64.5%, compared to Canaan's 23.3%, Bitmain could look to raise close to $300 million in its IPO—a drastic reduction compared to the $3 billion it sought to raise in its Hong Kong IPO.
Bitmain's IPO, which is said to be sponsored by Deutsche Bank, could hinge on the public reception to Canaan's IPO. This should become clear after Canaan shares begin trading on NASDAQ later today under the ticker 'CAN', at which point the market will set its trading value. Should the market open and hold at above the IPO price, then it wouldn't be unreasonable to assume that increased public interest in cryptocurrency mining companies could follow, thus making Bitmain's IPO all the more likely.