Ripple Labs to bid for $285 million share buyback: Report
Ripple Labs is planning a tender offer to buy back a $285 million stake in the company from previous investors and employees, according to a Reuters report, citing sources familiar with the matter.
A Ripple spokesperson confirmed the transaction to Cointelegraph. Ripple plans to spend a total of 500 million dollars in this process. The budget includes the cost of converting restricted stock units into common stock.
According to Reuters, investors can sell only 6 percent. The transaction values the company at $11.3 billion. According to Ripple's profile on Crunchbase, it has raised a total of $293.8 million in funding over 14 rounds since 2015.
The company now holds more than $25 billion worth of crypto, primarily in XRP (XRP), and has more than $1 billion in cash on its account, CEO Brad Garlinghouse said.
More purchases are expected as Ripple intends to offer early investors an exit. According to Garlinghouse, the company has no immediate plans to go public in the United States, where it is based, because the country's regulatory environment is uncertain.
Ripple is valuing the company at $11 billion to buy back $285 million in shares – sources pic.twitter.com/maaeoF0TXN
— Reuters (@Reuters) January 10, 2024
Ripple's return strategy provides an alternative exit route for early investors, which differs from the traditional public exit route. In other words, the approach allows investors to cash out their investments instead of going through a traditional liquidity event known as an initial public offering (IPO).
By opting for a buyback over the IPO, Ripple retains more control and flexibility over the business. With a public offering, the company must manage additional regulatory requirements, market volatility and investor expectations. In contrast, a buyback allows Ripple to manage its investor relations without the complexities that come with being a publicly traded company.
“Growing in the headwinds of the SEC lawsuit was certainly challenging, but 95% of our customers are non-US financial institutions,” Garlinghouse told Reuters.
Ripple Labs is the technology company behind the Ripple payment protocol and the XRP token. The company has been in litigation with the US Securities and Exchange Commission since December 2020, alleging that it made an unregistered offer of securities through the sale of XRP.
The case took a major turn in July 2023, when Judge Analisa Torres ruled in part in favor of the company, saying XRP was not safe for programmatic sales on exchanges. However, the court found that XRP is safe when sold to institutional investors in funding rounds.
According to Cointelegraph market data, XRP is trading at $0.56 at the time of writing, with a capitalization of $30.7 billion.
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