Swiss-based investment firm GAM Investments has urged SBI Holdings, a major Japanese financial institution, to adopt an XRP buyback program. The proposal, made through an open letter to SBI’s CEO, Yoshitaka Kitao, suggests that the company implement a strategy similar to the Bitcoin acquisition strategy employed by MicroStrategy. GAM’s recommendation aims to address SBI’s market undervaluation and unlock hidden value in the company’s crypto holdings, particularly its significant stake in Ripple Labs.

SBI’s Undervaluation and the Hidden Value of Ripple Holdings

GAM Investments has highlighted a significant gap between SBI’s current market valuation and the hidden value of its holdings in Ripple and XRP. According to GAM, SBI’s indirect stake in Ripple, worth over JPY 1.6 trillion, is much higher than its current market capitalization of JPY 1.2 trillion. This discrepancy points to a major market undervaluation of SBI, largely due to the lack of clarity regarding its strategy and the value of its crypto assets, particularly its holdings in XRP.

Despite owning a substantial stake in Ripple Labs (around 8-9%), SBI’s crypto investments have not been fully recognized or appreciated in the market. The company has yet to disclose the daily valuation of its XRP holdings, which could potentially lead to greater transparency and a clearer understanding of its true net asset value (NAV).

GAM’s Proposal for an XRP Buyback Program

To rectify SBI’s undervaluation and unlock the hidden value of its crypto assets, GAM has put forward a series of proposals, with the most significant being the implementation of an XRP buyback program. This would involve SBI using a portion of its cash flow generated from its banking and securities businesses to purchase XRP directly from the market, thereby reducing the circulating supply and potentially increasing its market value.

This strategy is modeled after the highly publicized Bitcoin accumulation strategy used by MicroStrategy, which has seen the company amass significant Bitcoin reserves, positioning it as a major player in the digital asset space. GAM believes that by adopting a similar approach with XRP, SBI can enhance the value of its holdings and provide long-term benefits to its shareholders.

Enhancing Value for Shareholders

By implementing the proposed XRP buyback program, GAM suggests that SBI could reduce the circulating supply of XRP, which would likely lead to an increase in its price. Additionally, by making its crypto assets more transparent and regularly updating shareholders on the value of these holdings, SBI could improve its market performance and close the gap between its market value and true NAV. GAM estimates that with these changes, SBI’s true NAV could be closer to JPY 3.9 trillion, far exceeding its current market capitalization.

SBI has long been an advocate for blockchain technology and cryptocurrency adoption, especially in Japan. However, despite its significant role in the crypto sector, particularly through its involvement with Ripple, the company’s market performance has not fully reflected the potential value of its holdings. The proposed buyback program is seen as a way for SBI to capitalize on its crypto investments and unlock greater shareholder value.

Conclusion

GAM Investments’ proposal to implement an XRP buyback program for SBI Holdings represents a bold move aimed at addressing the significant undervaluation of the company’s market capitalization. By following a strategy similar to MicroStrategy’s Bitcoin accumulation approach, SBI could unlock the true value of its Ripple assets and enhance long-term value for its shareholders. As the global cryptocurrency market continues to mature, this strategy could help position SBI as a key player in the blockchain and crypto space, while also delivering substantial returns for its investors.