Cryptocurrency exchange Binance plans to take a $200mn stake in Forbes as the century-old US business magazine aims to go public through a blank-cheque company.
Forbes has been seeking $400mn of additional capital through a private placement as part of its plans to list in New York via a tie-up with special purpose acquisition company Magnum Opus Acquisition Limited, a deal that is expected to value the business title at $630mn.
The proposed investment by Binance Capital Management, a British Virgin Islands-registered investment vehicle for the crypto group, would mean two top Binance executives being appointed as directors on the Forbes board.
The crypto exchange’s plans to scoop up the Forbes stake highlight the growing influence of digital asset companies, many of which have grown at rapid pace in recent years, on traditional markets, from media to finance.
Binance, one of the world’s largest crypto exchanges, sued Forbes for defamation in 2020 over an investigation by the magazine that said the crypto group used its complex corporate structure to intentionally evade US regulation, claims that Binance denied. The exchange later dropped the lawsuit.
“It’s totally water under the bridge,” said Patrick Hillmann, chief communications officer at Binance, about the lawsuit.
Hillmann, who will join the publisher’s board, said that Forbes journalists “have our pure and unadulterated respect” and that editorial independence at the publisher will “100 per cent” be guaranteed.
He said the deal would help Forbes boost its digital ambitions: “Our team has some pretty big ideas that we want to bring to the Forbes leadership team.”
The deal represents a major foray into mainstream media for a crypto firm. US-based Digital Currency Group already owns CoinDesk, a well-known crypto specialist publication.
Forbes, founded by Bertie Charles Forbes and Walter Drey more than a century ago, published its first issue in 1917 and is known for tracking the world’s wealthiest individuals, including those who have made their money in recent years from the rise of cryptocurrencies.
“With Binance’s investment in Forbes, we now have the experience, network and resources of the world’s leading crypto exchange and one of the world’s most successful blockchain innovators,” said Mike Federle, Forbes chief executive. “Forbes, already a resource for people interested in the emerging world of digital assets, can become a true leader in the field with their help.”
The company struck a deal in August with Magnum Opus Acquisition, a Spac backed by the Hong Kong-based private investment firm L2 Capital, which is expected to raise $600mn in fresh investment.
Binance’s investment follows several months of negotiations after the crypto group approached Forbes about investing in the publisher. Hillmann said Binance was considering further deals in media and other industries as it aims to build its business as a “blockchain infrastructure” provider.
The investment from Binance comprises half of the $400mn private investment for the Spac deal. Spacs typically raise this type of financing, which acts as a form of validation of the company’s valuation and prospects. The so-called Pipe market has dried up significantly in recent months as the enthusiasm for blank-cheque deals has cooled significantly because of poor performance and increasing regulatory scrutiny.
Best known for its billionaires list, Forbes magazine has chronicled the rise of the ultra-rich in recent decades, with its data often licensed by economists studying wealth inequality. In 2018 it began to build a wealth database that values cryptocurrency billionaires and has also launched lists aimed at putting a spotlight on promising cryptocurrency start-ups.
Among the crypto billionaires Forbes values is Changpeng “CZ” Zhao, Binance founder, who carries a $1.9bn net worth, according to the magazine, and who graced its cover in 2018.