Investment criteria & process

INVESTMENT CRITERIA

The company intends to apply the following guidelines for selection and evaluation of potential target companies:

  • The company will mainly focus on companies that offer products or services in the blockchain industry;

  • The company is looking for target companies (i) that have a strong competitive position in their industry, that is ideally based on unique technology (eg technical functions in products or service offerings), (ii) with a proven business model, (iii) and with high growth

  • The company intends to acquire 100% of the shares, and at least a majority stake, in one or more unlisted target companies which preferably have their head office in Europe, but which could have either global or European operations and;

  • The size of an acquisition is intended to be up to a company value of SEK 500 million

These guidelines are not intended to be exhaustive. Each evaluation regarding the benefits of a particular acquisition will be based, in the specific case, on some or all of the above factors as well as other considerations that management deems relevant to maximize the company's value creation.

INVESTMENT PROCESS

The company was created to carry out a acquisition within the framework of Spotlight Markets SPAC regulations. The company will therefore be completely focused on searching for acquisition objects and structuring and implementing an acquisition.

The company's work to find suitable acquisition targets is expected to result in a large number of potential targets. The company is then expected to discuss and possibly initiate due diligence on a number of acquisition targets. Following due diligence, the Company expects to negotiate with a couple of acquisition targets, which will lead to one or more acquisitions.

When a transaction has been agreed with the counter party, the Company will convene a general meeting and propose to the an acquisition to the shareholders. In order for the acquisition to be completed, a majority vote is required at the General meeting. and given that the general meting votes in favor of an acquisition, Spotlight then reviews the acquisition so that the target company meets the listing requirements.

SCREENING AND IDENTIFICATION OF ACQUISITION OBJECT

The company will use the management's and board's contacts and networks with private and public companies, as well as contacts with companies, contractors, managers, financial and legal advisers which will all be a strong contributors to finding a suitable acquisition target. The company further expects that potential target companies will also be remarked by their shareholders and advisers who are investigating the possibilities of a liquidity event. The fact that the Company offers a target company a predetermined valuation with limited IPO risk constitutes a competitive advantage.

The management team will, with the support of the board, work systematically to identify potential target companies. The management expects to identify a large number of companies through its screening. The process for evaluating the company can be compared to a funnel where the majority of companies that are identified will drop out for each step of in-depth analysis and evaluation that the management carries out. The most attractive target companies will be prioritized and further analyzed. A potential company for an acquisition would then go into a deeper due diligence process. This process will create a strong pipeline of opportunities, where several alternatives are compared and resources are used more efficiently. A strong pipeline of identified opportunities creates a stronger position to negotiate from.

EVALUATION, NEGOTIATION, FINANCING AND DECISION-MAKING PROCESS

As potential target companies advance in the "funnel", the evaluation will be deepened. After the initial review, a smaller number of companies will thus be further evaluated for e.g. attractiveness from a blockchain perspective, the attractiveness of the industry, financial results, ownership structure, etc. Companies that are judged to be attractive by the investment team are then included in an in-depth evaluation. Such an evaluation would include an in-depth evaluation of the industry and companies, management assessment, stock market capability, blockchain factors, the owner's intentions, valuation and an initial strategic plan. The company will also enter into negotiations with the target companies' current owners in order to agree on transaction terms, etc.

The company's goal is to acquire 100% of one or more target companies. The transaction structure will be affected by a number of factors, including the ownership structure of the target company and their long-term agenda. The acquisition may take place as a pure share transaction, as a combination of shares and cash or as a pure cash acquisition.

Provided that the target company, the valuation and the transaction structure are deemed attractive, the board then decides whether the transaction is to be completed and determines the parameters for the final negotiations. Once the transaction documentation has been agreed and approved by the Board, the Company will convene a general meeting and propose an acquisition for the shareholders. The company will also initiate a listing process with Spotlight Stock Market.

COMPLETION OF THE ACQUISITION AND DE-SPAC: ING

With approval from the Annual General Meeting and Spotlight, the Acquisition can then be completed, HODL take over the shares in the target company and the unlisted target company becomes a listed company through HODL. HODL thus transitions from being a SPAC to becoming a regular operating company (so-called De-SPAC: ing).