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Sydnee Gatewood
Sydnee Gatewood
Articles (2972) 

Steven Cohen Ups Stake in Blank Check Company Netfin Acquisition

The company is set to combine with Triterras Fintech

Point72 Asset Management leader Steven Cohen (Trades, Portfolio) revealed his firm increased its stake in Netfin Acquisition Corp. (NASDAQ:NFIN) by 381.52% late last week.

With the goal of generating superior risk-adjusted returns, the billionaire guru's Stamford, Connecticut-based firm invests in a wide range of asset classes worldwide. Its long-short strategy is based on bottom-up research processes focusing on fundamentals and macroeconomic conditions.

According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in an additional 1.33 million shares of the U.S.-based blank check company on Oct. 1, which had an impact of 0.09% on the equity portfolio. The stock traded for an average price of $10.38 per share on the day of the transaction.

The guru now holds 1.67 million shares total, which represent 0.11% of the equity portfolio. GuruFocus estimates he has gained 1.93% on the investment since establishing it during the second quarter.

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The special purpose acquisition company, which agreed in July to combine with Triterras Fintech Pte Ltd., has a $339.21 million market cap; its shares were trading around $10.50 on Tuesday morning.

According to the price chart, the stock has gained approximately 5% year to date.

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Company overview and deal details

As a SPAC, Netfin acts as a shell company that has no commercial operations but raises capital through an initial public offering in order to acquire or merge with another existing company.

Headquartered in Singapore, Triterras Fintech is a leading fintech company focused on commodity trading and finance. Its flagship product is called Kratos, which, according to the company's website, is a custom-built, blockchain-enabled, end-to-end global trade and trade finance platform. It was developed to enable commodity traders to trade and source capital from lenders directly online.

The company, which was founded in 2018, monetizes its platform by charging fees to its users on their trading and financing transaction volumes. In fiscal 2019, Triterras reported that it generated $3.6 billion in transaction volumes, $16.9 million in revenue, $14.8 million in earnings before interest, taxes, depreciation and amortization and $13.2 million in net income. For 2020, it is projecting $7.8 billion in transaction volumes, $56.6 million in revenue and $39.8 million in Ebitda. It also anticipates it will grow at a compounded annual rate of more than 60% through 2023.

Srinivas Koneru, founder, chairman and CEO of Triterras Fintech, said the company's "tech-enabled platform" and "deep industry experience" gives it "a first-mover advantage in disrupting the physical trade and trade finance industry." He also noted that the Covid-19 pandemic has greatly increased customer activity and transaction volumes on the Kratos platform.

In a statement, Marat Rosenberg, president and director of Netfin, said the deal will create "a leading pure-play fintech company that is digitizing a large and growing industry, while making transactions more cost-efficient, secure and faster."

"This is a high-margin, fast-growing platform business with scale," he said. "As a public company with access to capital markets to fund its growth, we believe Triterras Fintech will deliver strong near and long-term value for Netfin shareholders. We look forward to supporting Triterras Fintech's leadership through their new growth phase as a public company."

Upon the deal's closing, which is on track to occur during the final quarter of 2020, a newly formed Cayman holding company named "Triterras" will acquire the combined entity and register its shares for listing on the Nasdaq under a new ticker symbol.

Guru interest

With a 5.18% stake, Cohen is Netfin's largest guru shareholder. Many other investment firms are looking to take advantage of the pending deal as well, including Glazer Capital LLC, Polar Securities Inc., Linden Advisors LP, Shaolin Capital Management LLC, Berkley W.R. Corp. and Sand Grove Capital Management LLP.

Portfolio composition

Cohen's $15.33 billion equity portfolio, which was composed of 778 stocks as of the three months ended June 30, is most heavily invested in the health care, technology and consumer cyclical sectors. Financial services stocks represent 9.59% of the equity portfolio.

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Other financial services companies Cohen owned as of the end of the second quarter included RenaissanceRe Holdings Ltd. (NYSE:RNR), PayPal Holdings Inc. (NASDAQ:PYPL), Arch Capital Group Ltd. (NASDAQ:ACGL), Equitable Holdings Inc. (NYSE:EQH) and Capital One Financial Corp. (NYSE:COF).

Disclosure: No positions.

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About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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