Key Highlights
- Zhibao Technology has entered a non-binding agreement with Joyertech and Information OPC for a PIPE financing deal involving approximately 3,500 Bitcoin, valued at about $220 million.
- The buyer will appoint most of Zhibao's board of directors upon closing, thus gaining control while the existing management continues to oversee daily operations.
- On July 15, Zhibao received a deficiency notice from Nasdaq for trading below $1 per share, but its stock price surged following the Bitcoin treasury announcement.
Zhibao Technology Inc., a company listed on Nasdaq and based in Shanghai, primarily involved in digital insurance sales in China, declared on Wednesday that it has signed a non-binding agreement to accept roughly 3,500 Bitcoin as part of a proposed stock sale. This transaction would represent an estimated $220 million at the current market price of Bitcoin.
As stated in the company's press release, "the Buyer (or its designated entity) plans to subscribe for securities in a proposed PIPE financing, with the expectation that compensation will include approximately 3,500 Bitcoin, pending final valuation, custodial arrangements, audit verification, regulatory review, Nasdaq compliance, and the signing of definitive agreements."
A PIPE (private investment in public equity) allows a private investor to acquire shares directly from a publicly traded company rather than through the stock market. In this instance, the buyer, identified as Joyertech and Information OPC, intends to use Bitcoin instead of cash for the purchase.
Control Dynamics
This agreement comes with significant implications beyond merely acquiring Bitcoin. According to the term sheet, "the Company intends to maintain its existing operations while the Buyer is expected to appoint the majority of the board of directors at the closing of the PIPE financing." Consequently, Joyertech would effectively assume control of Zhibao.
Trading under the ticker ZBAO on Nasdaq, Zhibao positions itself as "a leading high-growth InsurTech firm and pioneer of the 2B2C digital embedded insurance model in China." The company launched what it claims to be the first digital insurance brokerage platform in China in 2020, utilizing its proprietary platform-as-a-service, allowing other companies to integrate insurance offerings into their services.
Just a week prior to this announcement, on July 15, Zhibao revealed it had received a deficiency letter from Nasdaq due to trading below $1 per share, with shares trading around $0.22 at the time.
Following the announcement, the stock price soared from $0.15 to $0.40, more than doubling in less than four hours. However, the price later adjusted to around $0.24, still reflecting a notable 60% increase.
Emerging Strategy
This approach is becoming increasingly prevalent. Instead of raising cash to buy Bitcoin on the public market—similar to the strategy adopted by Strategy (formerly MicroStrategy) starting in 2020—Zhibao is opting to receive Bitcoin directly as payment, establishing a treasury on its balance sheet from the outset.
According to the agreement, the current management team will only remain temporarily. The press release indicates that "the current management team is expected to continue overseeing the day-to-day operations of the legacy business" until a future "separation, disposition, or other restructuring" occurs. In simpler terms, the founders will manage the insurance segment until the new owners determine the next steps.
The trend of Bitcoin treasury management has gained traction on Wall Street over the past two years, with numerous firms adjusting their business models around Bitcoin holdings. Over 150 publicly traded companies now include Bitcoin in their assets. However, this shift has not always yielded positive outcomes.
While many of these companies enjoyed significant initial gains in stock prices following announcements of their digital asset holdings, enthusiasm has waned as the market faced downturns. Recently, U.K.-based Satsuma Technology announced it would liquidate its remaining Bitcoin, return funds to investors, and shut down operations.
For Zhibao, the transaction remains tentative. The company’s filing underscores that the term sheet is non-binding, and the proposed deal "is still subject to, among other factors, satisfactory legal, financial, and operational due diligence, the negotiation and execution of definitive agreements, corporate and regulatory approvals, compliance with Nasdaq listing standards, and other customary closing conditions."
Zhibao has a period of 180 calendar days—until January 6, 2027—to restore compliance with Nasdaq's minimum bid price requirement of $1 per share.