EastBridge Investment Group Inc. (OTCBB: EBIG) is a provider of financial services to emerging public companies, with clients in the same industries as companies like New Oriental Education & Technology Group Inc. (NYSE: EDU) and Tesla Motors Inc. (NASDAQ: TSLA). In 2011, the company added several new clients and brought its existing clients closer to an initial public offering (IPO).
The company generates income through a combination of cash fees and equity stakes in its clients. By taking these clients public on U.S. stock exchanges, the firm generates significant long-term and short-term value. Typically, the company will divest part of its equity stakes via an equity dividend to its own shareholders, sell a portion to cover its operations and keep some on its balance sheet as an asset.
Several Clients Move Closer to an IPO
EastBridge was forced to delay the initial public offerings of several clients due to poor market conditions. Despite their strong financial performance, the companies opted to delay their offerings in hopes of obtaining a higher earnings multiple on their stock. These delays may have caused some concerns for EBIG shareholders, but in the long-run, they were likely the best decision.
Now, the wait appears to be drawing to a close. Tsingda Education engaged a new underwriter for its IPO in July of this year that pegged its value at about $4.56 per share. Just a month later, EastBridge issued a dividend of that stock to shareholders at a ratio of 486-to-1. Other clients like Dwarf Technologies also recently registered shares with the SEC in a preliminary step towards an IPO.
Consulting Clients Drive Near-term Income
EastBridge has also started signing more consulting clients that could help generate near-term income. In June, the company succeeded in assisting FIZZA LLC in obtaining $200,000 in seed capital that it needed to bring its first product to market. Meanwhile, the company is working with U.S.-based Cambrium Learning to expand by forming joint ventures with education companies in China.
These companies typically make up-front payments with an equity kicker in a transaction that generates short-term and long-term value. And with several other potential consulting agreements in its pipeline, the company could be poised to unlock significant value over the coming quarters.
A Great Investment Opportunity
EastBridge Investment Group (OTCBB: EBIG) represents a solid investment opportunity. While it has faced some timing setbacks, the decision to delay some of its IPOs could end up unlocking significantly more value. Meanwhile, its consulting agreements promise to generate near-term income and long-term potential. In the end, these factors could lead to a strong end to a great year in 2011.
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