In an open letter to Yoshitaka Kitao, CEO of SBI Holdings, GAM Investments called on the Japanese financial giant to adopt an ambitious XRP-focused strategy.
The Swiss-based investment manager urged SBI to implement an XRP buyback program, adopting a strategy similar to MicroStrategy’s Bitcoin accumulation approach. The letter highlights SBI’s market undervaluation and proposes a plan that mirrors MicroStrategy’s strategy with Bitcoin.
SBI Undervaluation and Shareholder Concerns
In the letter, GAM argues that SBI Holdings, which holds a significant stake in Ripple Labs and its XRP holdings, is trading at a steep discount to its true net asset value (NAV).
According to GAM, SBI’s indirect holdings in Ripple, valued at over JPY 1.6 trillion, exceed the company’s current market capitalization of JPY 1.2 trillion. This points to a major disconnect between the company’s market value and the hidden worth of its crypto assets.
Furthermore, GAM pointed out that the lack of clarity in SBI’s strategy around Ripple’s blockchain technology and its crypto investments contributes to the company’s underperformance in the market.
GAM Proposals for SBI, Including XRP Buyback
To address this undervaluation and unlock shareholder value, GAM outlined several key recommendations. First, it suggests that SBI adopt a more transparent approach by publishing a daily valuation of its XRP holdings. Moreover, it called for regular updates to shareholders on its NAV components.
Meanwhile, the most significant proposal from GAM is for SBI to implement an XRP buyback program. Specifically, it called for recycling a portion of its cash flow from its banking and securities businesses to purchase XRP directly from the market.
The strategy is to emulate MicroStrategy’s highly publicized Bitcoin accumulation, which has propelled the U.S.-based company into the spotlight.
GAM believes this approach would enhance the value of SBI’s XRP holdings and provide long-term benefits to shareholders by reducing the supply of XRP in circulation and potentially driving up its market value.
Notably, SBI owns 8-9% of Ripple Labs and has long advocated blockchain technology and cryptocurrency adoption, particularly in the Japanese market. However, despite this, the company’s XRP holdings and its involvement with Ripple have not been fully recognized by the market, leading to the significant undervaluation highlighted by GAM.
Meanwhile, with the proposed buyback program, GAM believes SBI can unlock substantial value for its shareholders and bring its market capitalization closer to its true NAV, estimated at JPY 3.9 trillion.
