A Swedish public company, Stockholm IT Ventures AB (SVAB), announced Wednesday that it closed out a deal with the Chinese oil giant, Netoil Inc. With this deal, Netoil will inject the whopping sum of €200M into SVAB as well as tokenize its oil delivery deal, which will start from the Middle East.
Terms of the Contract
SVAB, which is listed on the Frankfurt Stock Exchange, will tokenize a corporate bond with a face value of €300M. Also, Netoil’s oil and gas production business will secure the deal. The idea is to use the bond to settle payments among countries in the Middle East where Netoil operates. In other words, companies in these countries can access the bond for payment and delivery issue settlements. The good part is that settlements will happen in a matter of minutes unlike previously when it took days. More importantly, settlements will be in tokens, which will effectively represent oil for trade and settlement.
SVAB Hybrid Bonds
Over time, SVAB has developed a way of creating hybrid bonds where such bonds are listed on the traditional stock exchange markets. Apart from stock exchange listings, the bond will also be tradable as a token, thus having a dual function. The name of the token is BytemineX, and it will launch soon. So, as part of this launch, SVAB has introduced a simple bond trading service which will enable its members to trade bonds just like exchange-listed tokens.
For successful issuance of the bond, SVAB will charge a fee of 0.2%, representing €600,000. In keeping with this deal, Netoil will inject the capital sum of €200M into SVAB as shares subscription at the rate of €0.2899 per share. Moreover, this capital injection is important to expand SVAB acquisition and expansion operations. Specifically, SVAB will use the funds for debt settlement. This is because the company has accrued commitment from its former business. From the look of things, SVAB will issue over 1.718 billion shares valued at €0.123/share.
Tokenization of Assets
Indeed, tokenization is gradually becoming a hot subject in the business world today due to the gains it can bring. No doubt, it can use smart contracts to significantly cut administrative costs and increase liquidity. Not to mention that it improves transparency and increase the asset value. Looking at the bigger picture, tokenization can also open up space for new investments. This way, it will bring in some 1.7 billion unbanked adults worldwide. Undeniably, industry experts believe that the technology of tokenization is one of the most innovative tools stemming from blockchain technology. Experts forecast that in the next 12 to 18 months from now, over €1 trillion worth of assets will be tokenized.
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