Ripple Plans $285M Buyback as Alternative Exit Strategy for Early Investors, Valuation at $11.3B
Summary:
Ripple Labs is planning to buy back $285 million of its shares from early investors and employees as an alternative exit strategy, contrary to the typical IPO route. The company intends to spend $500 million in the process, which will put Ripple's valuation at $11.3 billion. Ripple currently has over $25 billion in cryptocurrency, mainly XRP, and over $1 billion in cash. Due to regulatory uncertainties in the U.S., Ripple has no immediate plans to go public.
Ripple Labs, the firm behind the cryptocurrency XRP, is reportedly planning on offering to repurchase $285 million of its stock from early stakeholders and employees. The company plans to invest a total of $500 million in this process, which includes the cost of turning restricted stock units into common shares, an anonymous source shared with Reuters, later confirmed by a representative from Ripple. The deal would put the company’s worth at an estimated $11.3 billion. According to Crunchbase, since 2015 Ripple has seen a total of $293.8 million in funding over 14 rounds. The firm currently owns over $25 billion in cryptocurrency mostly in form of XRP, in addition to over $1 billion in cash, according to CEO Brad Garlinghouse.
The firm is choosing to initiate stock buybacks as opposed to going public in the near future, particularly in the United States where Ripple is based, due to unclear regulatory conditions. This strategy of a buyback will provide original investors with an alternative exit option, differing from the more traditional method of becoming a public company, thus giving Ripple more control and adaptability in its operations. If Ripple were to go public, it would face increased regulatory demands, market fluctuations, and the challenge of managing investor expectations. CEO Brad Garlinghouse explained to Reuters that the majority of Ripple’s clientele are non-U.S. financial institutions, and credited Ripple's growth despite legal struggles with the U.S. Securities and Exchange Commission (SEC).
In December 2020, Ripple landed in legal trouble with the SEC, accused of running an unregistered securities offering through the sale of XRP tokens. The lawsuit saw a significant development in July 2023 when Judge Analisa Torres partially sided with Ripple, ruling that XRP is not a security regarding its systematic sales on exchanges. However, the court determined that XRP was a security when sold to institutional investors in funding rounds. Currently, XRP's market price is $0.56 with a market cap of $30.7 billion, according to Cointelegraph's market data.
Published At
1/10/2024 8:55:00 PM
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