Ripple drops IPO plan, eyes buy back of $285 million privately owned shares

Ripple, one of the largest payment remittance firms has dropped its plans to go public in the US, according to a recent Reuters report. As the arduous legal battle with the US Securities and Exchange Commission (SEC) draws to a close, Ripple has plans to buy back shares in a move that boosts liquidity for investors, offering them the opportunity to sell their shares to the giant. 

Ripple is a privately funded company. It has closed five rounds of funding, which included two rounds of angel funding, one round of seed funding, a Series A round, a Series B round and one Series C round. The proposed buyback would therefore involve a repurchase from original backers, via a tender offer. 

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Ripple Labs is buying back $285 million shares buyback

According to a recent Reuter’s report, Ripple could soon be valued above $11 billion if the payment firm successfully completes a proposed buyback of $285 million of its original shares. Reuters reported that two sources close to the matter informed the news corp the share buyback and the tender offer would theoretically push Ripple’s valuation to $11.3 billion. 

Sources that requested anonymity informed Reuters that investors’ sale of stakes is capped at 6%. The company has confirmed the offer and has plans to spend another $500 million to cover the costs of converting restricted stock units into shares. Restricted Stock Units (RSU) are often offered to employees as part of their compensation.  

Brad Garlinghouse, CEO of Ripple said that the firm expects to do more share buybacks on a regular basis and provide liquidity for investors, instead of its former plans to go public. According to Garlinghouse, the regulatory uncertainty in the US is a deciding factor in Ripple’s decision not to go public.

Ripple’s partial victory against the SEC, where it was determined that XRP is not an “investment contract,” is one of the factors that influenced Ripple to buyback its shares. 

XRP is trading at $0.5951 on Binance at the time of writing and the altcoin is down 1.2% on the day.