Ripple Labs, the company behind the XRP cryptocurrency, is launching a massive $285 million share buyback program to provide liquidity for early investors and employees. This tender offer would value Ripple at $11.3 billion - allowing shareholders to sell up to 6% of their stake.
tl;dr:
- Ripple plans a $285M share repurchase to give early backers liquidity
- The tender offer values the firm at $11.3B
- Investors can sell a maximum of 6% of their Ripple stake
- It’s Ripple’s second major buyback after a $200M round in 2022
- The move aims to provide exits without pursuing an IPO
This marks Ripple’s second major share buyback after it offered a similar liquidity lifeline last January following a $200 million funding round. That tender offer came when Ripple was worth $15 billion.
Now, with its legal troubles behind it after a partial court victory over the SEC in July 2023, Ripple wants to facilitate periodic buybacks rather than pursue an initial public offering (IPO). CEO Brad Garlinghouse cited “regulatory uncertainty” in the US as the reason an IPO isn’t on the table.
The news boosted XRP to over $0.60 - a 5.8% single-day jump. The rally aligned with double-digit gains for Bitcoin, Ethereum, and altcoins after the SEC finally approved spot Bitcoin ETFs.
Exit Ramps for Early Believers
Ripple has long sought avenues for early backers to cash out portions of their stakes without flooding the market. Going public also doesn’t appear feasible presently given legal grey areas.
Alternative liquidity events like buybacks enable Ripple to reward loyal investors who supported the company in its early days or through its SEC court battle. Employees also stand to benefit.
The latest $285 million repurchase plan will surely appease stakeholders eager for an exit pathway. And more buybacks could continue strengthening Ripple’s position in the crypto sector for years to come.