F-1/A: Diginex Limited Files Amendment No. 3 to Form F-1 Registration Statement for Public Offering

Diginex Limited has filed an amendment to its Form F-1 registration statement, detailing its upcoming public offering of ordinary shares and a resale of shares by existing shareholders.

Summary

• Diginex Limited, a Cayman Islands holding company, has filed an amendment to its Form F-1 registration statement for a public offering.
• The offering includes 2,250,000 ordinary shares by the company and 2,992,180 ordinary shares for resale by existing shareholders.
• The initial public offering price is estimated to be between $4.00 and $6.00 per share.
• Diginex Limited has applied to list its Ordinary Shares on the Nasdaq Capital Market under the symbol DGNX.
• The company will not receive any proceeds from the sale of shares by the selling shareholders.
• The company is an emerging growth company and a foreign private issuer, which provides certain exemptions from U.S. reporting requirements.
• The company's operations are primarily conducted through its subsidiary, Diginex Solutions (HK) Limited, which is based in Hong Kong.
• The company has a complex corporate structure involving a recent restructuring and share subdivision.
• The company has granted the underwriters an option to purchase up to 337,500 additional shares to cover over-allotments.
• The company intends to use the net proceeds from the offering for working capital and general corporate purposes.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While the company is pursuing growth opportunities and has innovative products, it also faces significant financial and operational risks. The company's history of losses and the complex regulatory environment in Hong Kong are concerning.

Positives

• The company is seeking to list on the Nasdaq Capital Market, which could increase its visibility and access to capital.
• The company has a suite of products and services that address the growing demand for ESG reporting and supply chain due diligence.
• The company has a global presence with operations in Hong Kong, the United Kingdom, and the United States.
• The company has a blockchain-enabled audit trail for its diginexESG platform, which provides greater transparency in the data.
• The company has a proprietary carbon footprint calculator based on the GHG protocols, which is integrated into the diginexESG platform.

Negatives

• The company has a limited operating history and has incurred operating losses since its inception.
• The company's business lines are not assured to be profitable.
• The company faces risks related to cyberattacks and security breaches.
• The company's business is subject to economic, political, and market conditions in Hong Kong and worldwide.
• The company's business is subject to currency risk.
• The company's business may be adversely affected by natural disasters, pandemics, and other catastrophic events.
• The company may face substantial litigation risks.
• The company may not be able to keep pace with rapidly changing technology and client requirements.
• The company may face the risk that one or more competitors have or will obtain patents covering technology critical to the operation of one or more of its business lines and that it may infringe on the intellectual property rights of others.
• The company's controlling shareholders have a substantial influence over the company and his interests may not be aligned with the interests of other shareholders.
• The future sales of Ordinary Shares by existing shareholders, including the sales pursuant to the Resale Prospectus, may adversely affect the market price of our Ordinary Shares.

Risks

• The company has a limited operating history and has incurred operating losses since its inception.
• The company's business lines may not produce sufficient cash flows to fund the capital requirements and expenditures necessary to run the business.
• The company faces risks and uncertainties relating to doing business in Hong Kong, including the potential for PRC government intervention.
• The company's Ordinary Shares may be delisted or prohibited from being traded under the Holding Foreign Companies Accountable Act if the PCAOB were unable to fully inspect its auditor.
• The company's controlling shareholders have a substantial influence over the company and his interests may not be aligned with the interests of other shareholders.
• The future sales of Ordinary Shares by existing shareholders, including the sales pursuant to the Resale Prospectus, may adversely affect the market price of our Ordinary Shares.
• The company is an emerging growth company and may take advantage of certain exemptions from disclosure requirements, which could make it more difficult to compare its performance with other public companies.
• The company may be unable to keep pace with rapidly changing technology and client requirements.
• The company may face the risk that one or more competitors have or will obtain patents covering technology critical to the operation of one or more of its business lines and that it may infringe on the intellectual property rights of others.
• The company's business may be adversely affected by natural disasters, pandemics, and other catastrophic events.
• The company's Ordinary Shares may be thinly traded and you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

Future Outlook

The company intends to use the net proceeds from the offering for working capital and general corporate purposes. The company expects to continue to develop its business lines and expand its customer base.

Management Comments

• The company's management believes that the company's products and services are well-positioned to address the growing demand for ESG reporting and supply chain due diligence.
• The company's management believes that the company's blockchain-enabled audit trail provides greater transparency in the data.
• The company's management believes that the company's proprietary carbon footprint calculator will help companies to seamlessly calculate their Scope 1, 2 and 3 carbon footprint.

Industry Context

The announcement comes amid increasing global regulatory and investor pressure on companies to disclose their ESG performance and conduct due diligence on their supply chains. The market for ESG software is experiencing rapid growth, and Diginex Limited is positioning itself to capitalize on this trend.

Comparison to Industry Standards

• The company's diginexESG platform competes with other ESG reporting software solutions, such as those offered by legacy enterprise software companies, dedicated ESG tech start-ups, and consulting companies with ESG tech capabilities.
• The company's diginexLUMEN platform competes with other supply chain sustainability software solutions, such as those offered by companies specializing in worker voice technology, supply chain management, or supplier management.
• The company's diginexADVISORY services compete with other ESG consulting firms, ranging from large global consultancies to specialist and/or low-cost boutique advisory companies.
• The company's diginexPARTNERS service competes with other custom software development companies.
• The company's pricing for diginexESG is designed to be accessible to companies of all sizes, while many other ESG reporting platforms are characterized by relatively high-cost software designed more for large companies.
• The company's diginexLUMEN platform is unique in having a specific focus on social governance issues and leveraging worker voice data to simultaneously validate corporate disclosures.

Corporate Governance

Related Party Transactions

• The company has engaged in several related party transactions, including loans, services, and share issuances with Rhino Ventures Limited and other related entities.
• The company has a loan outstanding from Rhino Ventures Limited, which bears an 8% annual interest charge.
• The company has a loan outstanding from Diginex Holdings Limited, which bears an 8% annual interest charge.
• The company has issued convertible loan notes to existing shareholders, which will convert into equity upon the company becoming publicly listed.
• The company has a $2.4 million loan outstanding with RVL under a loan agreement, dated September 29, 2024.
• The company has agreed that RVL shall convert up to $3 million of the RVL Loan into Ordinary Shares upon the pricing of this Offering at the IPO offering price.

Stakeholder Impact

• Shareholders will be subject to potential dilution from the issuance of new shares and the conversion of convertible securities.
• Shareholders may experience volatility in the price of the Ordinary Shares.
• Employees may benefit from the company's growth and potential for increased value of their share options.
• Customers may benefit from the company's continued development of its products and services.
• Suppliers may benefit from the company's growth and increased demand for its products and services.
• Creditors may be subject to increased risk due to the company's history of losses and working capital deficit.

Next Steps

• The company will seek to list its Ordinary Shares on the Nasdaq Capital Market.
• The company will complete the initial public offering.
• The company will use the net proceeds from the offering for working capital and general corporate purposes.
• The company will continue to develop its business lines and expand its customer base.

Key Dates

Keywords

ESG, sustainability, supply chain, reporting, blockchain, carbon footprint, due diligence, software, fintech, IPO