Why did VC firms invest in NQ sub at premium price?

[futurevalue]

Why did the VC firms invest in NQ sub at premium price? Any ideas?

With the same amount of money, the VC firms can buy much larger percentage of NQ's listed shares.

What is in it for the VC firms?

[BillNeuburger]

It establishes a value to various parts of the company, and as a whole. After the special committee's findings, it's probable that there has been some "interest" just as there was months ago. The stock price is not a fair indication of anything, it's trading in no-man's land and short sellers are obviously in control. So to prove valuation they took on some VC money that typically invests in private companies for a future payout. Those same investors sure could have bought the ADR, and maybe they are buying the ADR as well.
They didn't take on a huge investment from either VC, so this should not prevent another buyer from stepping in to buy the company outright, take it private, etc.

It was an intelligent move, it does not appear as such because some of us own this stock, but the underlying reasoning seems to be somewhat unknown, I don't think it was done as a stall tactic to provide a floor in the stock. I'd like to think after all of this, the company has learned enough to know that attacks would continue without the 20-F in short order.

[futurevalue]

Bill, Thanks for your thoughts. I guess those two VC firms may also have bought some ADRs after the announcements. Or maybe they are constrained by the fund mandates.

I figured the private investments gives the VC firms better access to do their diligence. It gives them more confidence to invest and get around the VIE structure.

But if I were to invest that much money in NQ, I would have just bought the shares.

[BillNeuburger]

Ok,
Let's say they did invest that much into the ADR,

1. There wouldn't be a 13/G filed as it would be less than 5%. So it wouldn't really matter one way or another except they would own shares. Outside of a mandate, there isn't anything precluding them from buying ADR's.
2. They wouldn't have a direct investment in what they may be truly interested in. It's of no surprise that there is a great deal of interest in gaming, and the enterprise business, both divisions expected to grow exponentially well into the future, especially in China. There are plenty of statistics supporting this.
3. NQ would not sell a stake in the divisions if it wasn't at a valuation that commensurate with reality. Also there has been criticism with respect to some of their investments, this debunks it unequivocally, given the microscope NQ is under, it's total hogwash that they are just making things up to create an illusion. It's pure insanity to feed into those allegations considering where we are now.

Finally, NQ's job is to create shareholder value, although it has not played out this way with the announcements, yet, this also puts the company on a better footing once they file the 20-F.

[Banco_Central_de_Costa_Rica]

Ok, Let's say they did invest that much into the ADR, 1. There wouldn't be a 13/G filed as it would be less than 5%. So it wouldn't really matter one way or another except they would own shares. Outside of a mandate, there isn't anything precluding them from buying ADR's. 2. They wouldn't have a direct investment in what they may be truly interested in. It's of no surprise that there is a great deal of interest in gaming, and the enterprise business, both divisions expected to grow exponentially well into the future, especially in China. There are plenty of statistics supporting this. 3. NQ would not sell a stake in the divisions if it wasn't at a valuation that commensurate with reality. Also there has been criticism with respect to some of their investments, this debunks it unequivocally, given the microscope NQ is under, it's total hogwash that they are just making things up to create an illusion. It's pure insanity to feed into those allegations considering where we are now. Finally, NQ's job is to create shareholder value, although it has not played out this way with the announcements, yet, this also puts the company on a better footing once they file the 20-F.

So why not do both? It's a win win if you think about it.

[BillNeuburger]

I don't disagree with you. With respect to this, there isn't anything out of the ordinary. It makes perfect sense and like someone said in the past. Perhaps NQ had to prove valuation for some other acquirer interest that came to light. I'm sure companies are sniffing..

[futurevalue]

I agree that there are a few good reasons why NQ wants to do the deal.

I am just trying to think from the view point of the VC firms. Maybe the VC frims can not buy ADRs due to their mandates. If that is the case, we longs should get much better returns than the VC firms do in the future.

All we need now is a clean 20F.

[roxron9]

I understand you asking this question. But the guy at Motleyfool asking this, that is shocking, given he is in the public arena.

You don't get redemption rights for NQ shares. Why would VC risk their money with NQ shares ?

Also NQ class B shares are not for sale at these prices.

[futurevalue]

How do you know they bought class B shares? Thanks.

I understand you asking this question. But the guy at Motleyfool asking this, that is shocking, given he is in the public arena.

You don't get redemption rights for NQ shares. Why would VC risk their money with NQ shares ?

Also NQ class B shares are not for sale at these prices.