In a recent move to bolster its financial standing, Tian Ruixiang Holdings Ltd, a company specializing in insurance brokerage services with a current market capitalization of $4.08 million, entered into a subscription agreement with Unitrust Holding Limited. The agreement, signed on Monday, involves the sale of 1,000,000 Class B ordinary shares at $2.31 per share, totaling an investment of $2.31 million.
Unitrust, already holding approximately 17% of Tian Ruixiang's total voting power before the agreement, will see its influence significantly increase. Post-transaction, Unitrust's voting power will surge to around 73%. This is due to the Class B shares' enhanced voting rights, with each Class B share carrying eighteen votes, compared to a single vote per Class A share.
The deal price represents a premium over the last traded price of the Class A shares on Nasdaq, which stood at $1.82 as of the day before the agreement. The premium is attributed to the additional rights associated with Class B shares, as detailed in a valuation report commissioned by Tian Ruixiang.
According to InvestingPro analysis, the stock is currently trading at a notably low Price/Book multiple of 0.13, suggesting potential undervaluation despite its recent -41% one-year return.
The transaction is not only a financial investment but also interlinks personal relationships within the company's leadership. Mufang Gao, the sole director and controlling shareholder of Unitrust, is related to Tian Ruixiang's CEO, Sheng Xu, as his mother-in-law.
Tian Ruixiang's board of directors and audit committee have given their nod to the agreement, which is expected to close by January 26, 2025. This strategic partnership is based on a mutual agreement documented in the Subscription Agreement and supported by an independent valuation report, both of which were integral to the SEC filing.
InvestingPro data shows the company maintains strong liquidity with a current ratio of 5.06, indicating robust short-term financial health. Subscribers can access 7 additional ProTips and comprehensive financial metrics for deeper analysis.
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