NEWS WRAP: Cango’s largest shareholder to boost stake to near-majority control

Enduring Wealth Capital Ltd. will buy $10.5 million worth of newly issued Class B Cango shares that will boost its voting stake in the bitcoin miner to 49.61%

By Doug Young

Cango Inc. (CANG.US) said on Monday its largest shareholder will buy additional stock to boost its voting rights in the company to nearly 50%, in the latest step of its ongoing transformation from car trader to bitcoin miner and aspiring high-performance computing (HPC) center operator.

The latest strategic step in Cango’s changing shareholder structure will see Singapore-based Enduring Wealth Capital Ltd. (EWCL) purchase 7 million newly issued Class B Cango shares for $10.5 million, according to the company’s announcement. That implies a price of $1.50 per share, representing an 8% premium to Cango’s Friday closing price of $1.39 before the announcement. Cango shares fell slightly on Monday after the announcement to close at $1.36.

Each Class B share carries super voting rights equal to 20 times the rights for each Class A share. Following the investment, EWCL’s Cango holdings will increase from 2.81% of the company’s shares to 4.69%. But because its shares have Class B super voting rights, EWCL’s voting rights will rise from 36.68% to 49.61%, giving it near-majority control of the company.

Cango said the deal is expected to close next month.

The shift is the latest for Cango in just over a year since it first announced its intent to move from its former business operating a China-focused car-trading platform to the newer business of bitcoin trading. Since then, the company has also announced its intent to purchase cryptocurrency mining facilities, which share many traits with an emerging new generation of data centers used to run AI-related applications.

Both functions require very large amounts of energy, often provided through on-site power generation using solar panels, to provide electricity for powerful computers needed for mining and AI applications. Cango has said it hopes to gradually diversify away from its current heavy reliance on bitcoin mining to the more stable business of operating such data centers, increasingly known as high performance computing centers.

Its current heavy bitcoin reliance has led to volatility in the company’s metrics, including rising costs for each bitcoin it mines as more miners pile into the sector, and declining values for each bitcoin it holds due to the cryptocurrency’s recent declines.

Cango has also gradually replaced its executive and shareholding teams to move away from its earlier focus on the company’s China-based car business and include newer managers and backers with experience in the financial sector. A key new player in that regard is EWCL, a company tied to Singaporean firm Antalpha Ventures. 

Another major stakeholder is Golden TechGen Ltd., which controlled 12.23% of Cango’s voting rights after an earlier structural change announced in June. Cango co-founders Zhang Xiaojun and Lin Jiayuan continue to be major stakeholders in the company as well, though their voting rights dropped to about 12% after the June change, and will fall even more following the latest purchase by EWCL.

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