Beneficient to acquire Mercantile Bank for $1.5 million

DALLAS - Beneficient Company (NASDAQ: BENF), a provider of liquidity solutions and services for alternative assets, has announced an agreement to acquire Mercantile Bank (NASDAQ:MBWM) International Corp., a Puerto Rico-based financial entity. The transaction is valued at $1.5 million, to be paid through a combination of approximately 2.1 million shares of Beneficient's Class A common stock and cash. Currently trading at $0.81 per share with a market capitalization of just $4.26 million, InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value model.

The acquisition is aimed at expanding Beneficient's range of services, which includes custody and fee-based services for alternative assets. The company anticipates that the addition of Mercantile Bank will allow it to offer an expanded suite of services to a broader client base, including large institutional investors and international trading systems. According to InvestingPro data, BENF's financial health score currently stands at WEAK (1.54/10), with analysts projecting revenue growth of 119% for fiscal year 2025. For comprehensive analysis of BENF and 1,400+ other stocks, consider accessing InvestingPro's detailed research reports.

Mercantile Bank, licensed by the Office of the Commissioner of Financial Institutions of Puerto Rico, provides banking and financial services to non-residents of Puerto Rico. The acquisition is expected to enhance Beneficient's existing offerings and introduce new services such as the issuance of depositary receipts for foreign investments.

Beneficient expects the acquisition to begin contributing to its fee-based revenue and cash flow in 2025, which will support its ongoing operations and core liquidity product offerings. The closing of the deal, subject to customary conditions and regulatory approval by the Puerto Rican authorities, is anticipated in the second quarter of 2025.

This strategic move aligns with Beneficient's goal to democratize access to the alternative asset market for mid-to-high net worth individuals, small-to-midsized institutions, and General Partners. The company's online tools, AltQuote™ and AltAccess®, provide customers with rapid exit options and proposals for their alternative assets. InvestingPro analysis reveals concerning metrics, including a current ratio of 0.04 and significant cash burn rate, highlighting the importance of this strategic acquisition for the company's future growth. InvestingPro subscribers have access to 13 additional key insights about BENF's financial position and growth prospects.

The information regarding this acquisition is based on a press release statement from Beneficient. The company's management has expressed confidence in the potential for revenue growth and the ability to provide additional services that could attract higher fee rates than traditional custody services. However, as with any forward-looking statements, these are subject to risks and uncertainties that may affect the anticipated benefits and timelines of the acquisition.

In other recent news, Beneficient, a service provider for alternative asset investors, has regained compliance with Nasdaq's requirements, ensuring its continued listing on the exchange. The company, also known as Ben, has also reported sustained growth in Q2 of fiscal 2025, with a net income of $9.7 million, marking its second consecutive quarter of profitability. This growth is further supported by an improvement in permanent equity by $126 million and a significant reduction of operating expenses by 31.9%.

Beneficient has also announced the appointment of Karen J. Wendel (EPA:MWDP) to its Board of Directors. Wendel's expertise in banking, technology mergers and acquisitions, cybersecurity, private equity, and corporate governance is anticipated to bolster Beneficient's decision-making at the board level.

Despite a 55.9% decline in year-to-date net income and a 28% fall in year-to-date distributions compared to the previous year, Beneficient anticipates growth in demand for liquidity in its target markets, potentially expanding from $60 billion to $100 billion over the next five years. The company's focus remains on scaling operations, addressing regulatory challenges, and enhancing shareholder value. These are some of the recent developments for Beneficient.

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