Beneficient, a technology-enabled platform providing exit opportunities and primary capital solutions and related trust and custody services to holders of alternative assets through its proprietary online platform AltAccess, entered into an agreement to acquire Mercantile Bank International Corp. (“Mercantile Bank”), a Puerto Rico-based International Financial Entity (“IFE”), in exchange for an aggregate purchase price of $1.5 million, which is payable in up to approximately 2.1 million shares of the Company’s Class A common stock and cash.
“We are very excited about the potential avenues for revenue growth that would be facilitated through this acquisition,” said Beneficient. “Acquiring Mercantile Bank would enable the Company to offer an expanded range of companion custody and other fee-based services that complement our existing businesses on a broader scale with the potential to generate additional cash flow in the near term. Our objective is to deliver additional alternative asset custody services to customers with the potential to generate higher fee rates than are generally available for traditional custody services. We also believe the acquisition has the potential to enhance and broaden our current offerings in ways that may open new international opportunities, allowing us to further democratize the market for illiquid alternative assets.”
IFEs are licensed and regulated by the Office of the Commissioner of Financial Institutions of Puerto Rico (the “OCIF”) and may provide specific banking and other financial activity from Puerto Rico for persons, entities, and organizations around the globe that are non-residents of Puerto Rico. An IFE’s authorized activities may include custody, clearing, and payments and related traditional and digital products and services and, as approved by the OCIF, traditional banking services, such as deposits, lending, investments, and trusts.
Upon closing of the acquisition, the Company, which has primarily focused on meeting the needs of individual investors and small-to-midsized institutions, expects to expand its offering of custody services to also address the current needs of large institutional investors and the growing needs of third-party alternative trading systems and foreign securities exchanges. The acquisition would position Ben to offer alternative asset custody services that include, among other potential items, a companion line of business focused on issuing depositary receipts to assist holders of foreign investments gain access to the capital markets of additional international jurisdictions. The Company believes these alternative asset custody services may yield higher fee assessments than more traditional custody offerings.
The Company expects this companion business line to begin generating custody and depositary receipt issuance fee-based revenue and cash flow during calendar year 2025 that it would deploy to fund Ben’s ongoing operations and ultimately our core alternative asset liquidity product offerings. The acquisition reflects Beneficient’s execution on its objective of expanding its alternative asset custody fee-based service offerings to third parties and institutional investors.
Closing of the acquisition is subject to customary closing conditions, including, among other things, approval by OCIF, and is anticipated to be completed in the second calendar quarter of 2025.