In the month since Seven Stars Cloud announced plans to build its global technology headquarters in West Hartford, the once little-known financial technology company has landed its first major clients.
The company’s chief financial officer says SSC stands to earn $480 million from the latest deal, which was announced Monday to a more-than 50 percent leap in the company’s stock price.
The new account with China’s largest operator of electric buses also lends some legitimacy to SSC as a leader in next-generation financial solutions at a time when the company is just starting to build its profile in the United States.
“Certainly, you’re seeing that individuals and companies and different stakeholders and investors are embracing SSC as a major player in the space,” said Federico Tovar, the company’s CFO. “We know we’re onto something really unique and we’re really, really keeping our heads down, doing our work, and executing our strategy.”
Over the next three years, SSC will help China’s National Transportation Capacity turn about $24 billion in electric buses into financing to upgrade its fleets. The financing will allow the bus operator to meet a Chinese regulation requiring all buses to be electric by 2021.
The process SSC will use is called asset digitization — creating a thing of virtual value, like a digital token or currency, that’s backed by something of real, physical value, like a fleet of buses. The digital assets are then carved up into fractions and made available on different digital marketplaces, where investors can buy, sell and trade them.
The records of all those transactions are kept by a digital ledger, a technology called blockchain, which was first used to track cryptocurrency marketplaces.
“This deal is a perfect example of how SSC is leading the way in taking traditional industries, in this case (financing for buses), and disrupting that by putting it on the blockchain,” Tovar said.
Banks, insurance companies, automakers and other industries are all exploring different ways to put blockchain to use.
But to SSC, the digital ledger is a tool to help companies draw cash out of their existing assets. Tovar says he envisions SSC as a future gatekeeper of digital asset exchanges, just like Apple and Google are gatekeepers of the mobile app marketplace.
For the National Transportation Capacity, for example, SSC will create a new digital token and make it available on different exchanges outside of China. SSC will provide about $15 billion worth of these tokens to investors over three years.
Tovar said the company has not planned a launch date or a name for the token.
SSC announced its first major deal with a client on July 23, an exclusive agreement to provide financial technology services to a Chinese organization called the China Venture Capital Research Institute.
Under the deal, SSC will create a new class of digital assets to be traded on exchanges in China and globally.
Both of these mark a turning point in SSC’s transition from a media and entertainment company to a provider of financial technology services.
SSC already has some of the technology it will need. Over the past year, it bought up several blockchain-based companies like Velocity Ledger and Delaware Board of Trading, startups with their own asset trading platforms.
In the coming weeks and months, SSC will plan a new technology hub in West Hartford to complement its offices in New York and Beijing.
The company will locate its new $283 million development at the old UConn campus in West Hartford, which SSC is purchasing for $5.3 million.
The state has agreed to loan the company $10 million for renovations, and to forgive the loan if SSC employs 330 people at the technology hub over five years.
Tovar, named to his role June 1, said Connecticut’s support of SSC also bolstered the company’s credibility to shareholders and potential partners and clients.
Monday’s announcement, and the leap in SSC’s stock price, adds to the excitement around SSC, and the advancements in the financial technology field, he said.
“I think it sends a great message to the world that blockchain is here to stay,” he said.