Public companies are shifting towards new crypto-oriented financing, which may change the structure of financial engineering.
A New Era of Financial Engineering
According to Peter Chung, Head of Research at Presto, the current shifts in financial engineering are reminiscent of historical growth seen during the era of leveraged buyouts and ETFs. In his report, Chung emphasizes that companies are not merely riding the crypto hype but are actively leveraging volatility to enhance shareholder value.
Funding the Crypto Treasury Model
Companies utilize a variety of financing tools, including private placements, ATM offerings, convertible debt, and perpetual preferred shares to accumulate cryptocurrency. This approach allows them to grow their crypto holdings without pledging assets, while adapting to different stages of corporate maturity and investor appetite.
Market Implications for Companies
Firms that successfully execute this strategy may see significant increases in their net asset value (NAV) multiples, as the market rewards efficient capital structures and long-term crypto exposure. However, those that falter may experience sharp valuation penalties, mirroring traditional market dynamics based on earnings growth and capital discipline.
The transformation of public firms into crypto treasuries may become one of the defining financial stories of the decade.
