Metaplanet's Strategic Shift in Bitcoin Treasury Funding: Leveraging Perpetual Preferred Shares to Mitigate Dilution While Scaling BTC Holdings

In the evolving landscape of corporate Bitcoin treasuries, Metaplanet has emerged as a pivotal player, adopting a novel capital structure to fund its Bitcoin accumulation strategy while minimizing dilution for common shareholders. By introducing a two-tier perpetual preferred share framework-comprising MARS (Class A senior preferred shares) and MERCURY (Class B perpetual preferred equity)-the company has positioned itself as the third major Bitcoin treasury firm, following MicroStrategy (MSTR) and Strive (ASST), to leverage non-dilutive financing mechanisms according to a report. This strategic shift not only underscores the growing maturity of Bitcoin-backed corporate finance but also highlights the competitive advantages of preferred equity in scaling BTC holdings without eroding shareholder value.

A Dual-Tier Capital Structure: MARS and MERCURY

Metaplanet's capital raise of ¥21.25 billion ($150 million) through the issuance of 23.61 million MERCURY shares at ¥900 each according to a report exemplifies its innovative approach. These Class B perpetual preferred shares offer a fixed annual dividend of 4.9% on a ¥1,000 notional strike price, with quarterly payments and a 1,000-yen liquidation preference according to a report. Crucially, MERCURY includes a long-dated conversion option into common shares, linking its value to Bitcoin's performance while providing institutional investors with a hybrid of fixed income and equity upside according to a report.

Complementing this is the Class A MARS structure, a senior, non-dilutive instrument with adjustable monthly dividends that fluctuate based on share price movements. When Metaplanet's stock trades below par, MARS dividends increase, and they decrease when the price rises above par, effectively smoothing volatility for investors according to a report. This tiered approach prioritizes preferred shareholders over common equity in dividend payments and liquidation, offering an additional layer of dilution protection.

Mitigating Dilution: A Preferred Equity Advantage

Traditional equity issuance often dilutes existing shareholders by increasing the total number of shares outstanding. In contrast, perpetual preferred shares like MARS and MERCURY avoid this pitfall by offering fixed dividends and seniority in capital structure. For Metaplanet, this means raising capital to purchase Bitcoin-currently holding 30,823 BTC, the fourth-largest corporate treasury globally according to a report-without issuing new common shares.

This strategy mirrors MicroStrategy's (MSTR) approach, which has funded 390 BTC purchases entirely through preferred stock offerings according to a report, and Strive's (ASST) SATA structure, which provides a 12% annual dividend to finance Bitcoin acquisitions according to a report. By adopting similar frameworks, Metaplanet aligns with a broader trend of Bitcoin treasury firms prioritizing non-dilutive capital to scale BTC holdings while preserving common shareholder equity.

Market Implications and Investor Considerations

Despite its strategic merits, Metaplanet's shares have declined over 80% from their peak, trading at ¥387-a 0.96x multiple to net asset value (mNAV)-reflecting the market's undervaluation of its Bitcoin holdings according to a report. This discount presents an opportunity for investors who believe in the long-term appreciation of Bitcoin, as the company's capital structure is designed to amplify BTC's upside through conversion options and adjustable dividends according to a report.

However, the complexity of perpetual preferred shares-such as adjustable dividend terms and redemption mechanisms-requires careful scrutiny. For instance, MSTR and ASST have navigated tighter financial markets by structuring preferred shares with compounding dividends and redemption clauses that could impact liquidity according to a report. Metaplanet's success will depend on its ability to maintain disciplined capital allocation and navigate regulatory scrutiny, particularly as preferred equity instruments become more prevalent in the Bitcoin treasury space.

Conclusion

Metaplanet's dual-tier perpetual preferred share structure represents a sophisticated evolution in Bitcoin treasury financing. By combining fixed-income characteristics with equity-linked upside, the company has created a capital-raising mechanism that mitigates dilution while enabling aggressive BTC accumulation. As the market continues to test the resilience of these structures-against the backdrop of MSTR's and ASST's precedents-investors must weigh the potential rewards of Bitcoin exposure against the nuanced risks of preferred equity. For now, Metaplanet's approach underscores a compelling thesis: in the race to scale Bitcoin treasuries, innovation in capital structure may prove as critical as price action itself.