Ripple has decided to abandon its intentions to do an initial public offering (IPO) and is on the verge of repurchasing private shares worth $285 million.
Ripple's Chief Executive Officer, Brad Garlinghouse, has disclosed the company's intention to buy back shares on a regular basis in order to give investors with liquidity.
On its financial sheet, the company has more over one billion dollars in cash and twenty-five billion dollars in cryptocurrency, the majority of which is XRP.
According to a recent report by Reuters, Ripple, which is one of the major payment remittance services, has abandoned its ambitions to participate in the public offering in the United States. As the laborious legal fight with the United States Securities and Exchange Commission (SEC) comes to a conclusion, Ripple has plans to buy back shares. This action seeks to provide liquidity for investors by providing them with the chance to sell their shares to the firm.
Ripple refers to a corporation that is privately financed. The company has successfully completed five rounds of investment, which include two rounds of angel funding, one round of seed funding, a Series A round, a Series B round, and a Series C round. Therefore, the planned buyback would require a repurchase from the initial investors, which would be accomplished via a tender offer.
The repurchase of $285 million worth of shares is being done by Ripple Labs.
Ripple might soon be valued at more than $11 billion, according to a story that was published by Reuter's. This would be the case if the payment company were to successfully execute a projected repurchase of $285 million of its initial shares. The news corporation was told by two persons close to the situation that the share repurchase plus the tender offer would potentially lift Ripple's value to $11.3 billion. Reuters stated that these sources informed the news corporation.
The selling of holdings by investors is restricted at 6%, according to sources who sought anonymity and notified Reuters of this information. It has been verified that the offer has been accepted, and the corporation intends to spend an additional $500 million to pay the expenses associated with converting restricted stock units into shares. The provision of Restricted Stock Units (RSU) to workers is often included in the remuneration package that they receive.
Ripple's Chief Executive Officer, Brad Garlinghouse, said that the company anticipates increasing the number of share buybacks on a regular basis and providing liquidity for investors. This is in contrast to the company's previous ambitions to go public. According to Garlinghouse, one of the decision-making factors that led Ripple to decide against going public was the regulatory ambiguity that exists in the United States.
Ripple's decision to buy back its shares was motivated by a number of circumstances, one of which was the partial win won by Ripple against the SEC, in which it was found that XRP does not constitute a "investment contract."
At the time of this writing, the alternative cryptocurrency is trading on Binance at $0.5951, and it has had a daily decline of 1.2%.
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