In a recent open letter to Yoshitaka Kitao, the CEO of SBI Holdings, GAM Investments, a Swiss-based investment manager, called for the Japanese financial institution to adopt a bold strategy focused on Ripple’s XRP cryptocurrency. The proposal involves implementing an XRP buyback program, a strategy that mirrors the Bitcoin accumulation approach adopted by MicroStrategy.
In the letter, GAM Investments made a persuasive case for SBI’s market undervaluation, arguing that the financial giant’s current trading value pales in comparison to its true net asset value (NAV). SBI Holdings, as a significant stakeholder in Ripple Labs and its XRP holdings, is believed to have indirect holdings in Ripple valued at over JPY 1.6 trillion. This figure significantly overshadows the company’s current market capitalization of JPY 1.2 trillion, indicating a glaring disconnect between SBI’s market value and the concealed value of its crypto assets.
GAM further highlighted the lack of transparency in SBI’s strategy regarding Ripple’s blockchain technology and its crypto investments, which contributes to the company’s market underperformance.
In an effort to address this undervaluation and unlock shareholder value, GAM proposed several key recommendations. Foremost among these is the call for SBI to embrace transparency by publishing a daily valuation of its XRP holdings, coupled with regular updates to shareholders on its NAV components.
However, the most significant proposal from GAM is an appeal for SBI to implement an XRP buyback program. This would involve repurposing a portion of its cash flow from its banking and securities businesses to purchase XRP directly from the market. This approach emulates the strategy employed by MicroStrategy, whose well-publicized Bitcoin accumulation has put it firmly in the spotlight.
GAM believes that this approach could significantly enhance the value of SBI’s XRP holdings while providing long-term benefits to shareholders by reducing the supply of XRP in circulation, thereby potentially driving up its market value.
It’s worth noting that SBI Holdings owns between 8-9% of Ripple Labs and has been a vocal advocate for blockchain technology and cryptocurrency adoption, particularly within the Japanese market. Despite this, the company’s XRP holdings and its relationship with Ripple have not been fully recognized by the market, leading to the significant undervaluation highlighted by GAM.
Through the proposed buyback program, GAM believes that SBI can unlock substantial value for its shareholders, bringing its market capitalization closer to its true NAV, which is estimated at JPY 3.9 trillion.
