Decoding Token Buyback By EGW Capital

EGW Capital today announced that it would be buying back US $11 million or INR 82.7 crore worth of EGW tokens back from its investors just a few months away from its formal Initial Exchange Offering (IEO). The company has announced this through the official Twitter account. With this move, EGW Capital will make 95% of its investors exit the company and regain control.

EGW tokens rose little more than 40% post-announcement crossing the US $800 million market cap mark after 154 days. Going by the immediate rise in the token price, it is unlikely that all investors will tender their shares in the buyback as most of them are aware of the likely turnaround.

EGW Capital is currently finalizing the Initial Coin Offering (ICO) of its liquidity pool tokens called EGWLP. The liquidity pool will help the EGW token to find its fair value and market cap, and the investors in the liquidity pool will be paid hefty rewards to keep the trading market liquid. 

In the last year, the Blockchain investment bank saw a massive fall in its market cap despite a solid business model of taking the companies public both on crypto exchanges and the stock exchanges. The market cap in the last year reduced to US $550 million from the high of US $2 billion.

Technically, EGW Capital’s business model is highly profitable as the company earns tonnes of free equity shares in the businesses they take public. To put it in simple terms, EGW Capital does not make money, but they print money both in terms of revenue and the creation of notional assets. In the past few months, the harsh lockdowns made entrepreneurs go into hibernation mode. Still, with life coming back to track as people have started living with the pandemic, the IPO business is back on track as they need money to survive. But if the Covid spreads again, a lot will depend on how the government fights the situation, as the lockdowns have failed to curb the pandemics’ spread.

We can agree that Covid kept the company silent for over a year, plus the foggy outlook of the Indian government on crypto confused many of EGW Capital’s clients. The company claims that it is working on some large third-party projects.

This whole saga gets a little confusing for an average investor that why the more prominent investors will exit when the turnaround is about to happen. The simple explanation can be that investors want to clear off their positions before they reinvest, or they are simply taking advantage of the buyback, which is being offered.

What buyback means for the EGW IEO?

EGW Capital post buyback will be in complete control, which can help the company scale new heights in terms of value. The market cap may shoot up, but this is the pure assumption made based on how corporations generally increase their business market cap.

EGW Capital has borrowed from the open market to buyback investors taking advantage of the lower interest rates. Overall, EGW Capital’s future is becoming more bright with Blockchain being adopted on a mass scale. It will not be a surprise if EGW Capital touches back it’s an all-time high. Still, the investors have to invest and consult their investment advisor cautiously. It is for sure that EGW Capital is a credible crypto project, but it depends on the projects’ efficient execution and constant revenue flow.

Overall, the EGWLP ICO may be a great investment opportunity for the investors as the rewards will be fixed with adequate downside protection. 

Rahul Kumar, CEO of EGW Capital, denied providing any additional information despite repeated attempts.