Bakkt Holdings, a cryptocurrency platform majority owned by Intercontinental Trade, has introduced plans to go public by means of a mix with a blank-cheque firm, bringing collectively two of the frothiest parts of US markets.
New York Inventory Trade mum or dad ICE on Monday mentioned Bakkt has agreed to mix with a Spac sponsored by Chicago-based funding agency Victory Park Capital.
Bakkt, fashioned by ICE in 2018, is planning to launch an app in March that can let customers purchase and promote cryptocurrencies and handle different digital belongings corresponding to loyalty factors and present playing cards. Its ambition is to succeed in greater than 30m prospects by 2025, from none final yr, it says in its regulatory submitting. The app, at the moment accessible solely by invitation, has garnered curiosity from about 400,000 individuals in search of early entry, Bakkt mentioned.
When listed on the NYSE, it can have an enterprise worth of $2.1bn, ICE mentioned.
Monday’s deal highlights how a rising variety of mainstream corporations and traders are dabbling within the cryptocurrency sector. Bakkt’s plans for a public market debut come a few month after Coinbase, a well known digital forex change, introduced its intention to drift its shares in an preliminary public providing.
The announcement additionally demonstrates how Spacs supply a smoother path to public markets for corporations with new applied sciences and earlier stage companies. Final yr, Spacs made up virtually $76bn of the $159bn raised by IPOs within the US, outpacing conventional listings since August.
Final month, veteran investor Jeremy Grantham described the Spacs craze as “reprehensible”, regardless of himself making some $200m out of an early wager on battery maker QuantumScape after it went public by means of a Spac automobile.
The rising give attention to digital belongings comes as bitcoin, probably the most actively traded digital token, has surged in worth in latest months. Volatility stays excessive, nonetheless, highlighting the asset’s immaturity. Bitcoin costs dropped roughly a fifth in the beginning of this week as a high UK monetary regulator renewed its warning that customers investing in cryptocurrencies ought to “be ready to lose all their cash”.
Bakkt additionally provides a cryptocurrency storage service and bitcoin derivatives contracts. ICE’s revenues associated to Bakkt are anticipated to be roughly $9m for the fourth quarter of 2020, with working bills of about $39m. It is going to have some $500m in money on its stability sheet, reflecting $207m held by the Spac’s belief account and a $325m non-public placement of shares within the mixed entity, together with a $50m contribution from ICE.
Gavin Michael, the previous head of know-how for Citigroup’s world shopper financial institution, will take the reins as chief govt of the mixed firm, Bakkt mentioned on Monday. “The common shopper holds a wealth of digital belongings however hardly ever tracks their worth and lacks the instruments to handle and utilise them,” Mr Michael mentioned.
David Clifton, Bakkt’s interim chief, will be part of the mixed firm’s board after the deal closes.