Ripple is paying out a 3rd of its stake in Surging MoneyGram
Blockchain payment company Ripple is selling around a third of its stake in MoneyGram. This marks the first such sale of company shares since the startup in the remittance giants was founded in 2019.
According to a US Securities and Exchange Commission filed on Friday, Ripple owns 6.22 million MoneyGram shares, or 8.6% of the issued shares, as well as a warrant to purchase an additional 5.95 million shares for a total equity position of 12.2 million shares, or 17% of the outstanding MoneyGram shares.
Ripple is now selling up to 4 million shares, or approximately 33.3% of its total stake if you count the shares represented by the warrant. After the sale, Ripple will still own at least 3.22 million shares or 4.44% of MoneyGram. Including the additional shares represented by the warrant and giving Ripple the right to purchase shares at a set price, the blockchain payment company will continue to own approximately 11% of MoneyGram.
According to Ripple's initial investment announcement in June 2019, the company bought the shares in MoneyGram at a price of $ 4.10 apiece at a substantial mark-up on the then price. MoneyGram's shares are up more than 260% this year, trading at $ 7.42 on Wednesday, meaning Ripple is making a significant return on its investment.
“Ripple is a proud partner in MoneyGram's digital growth transformation. This is a purely sensible financial decision to get some return on Ripple's MGI (MoneyGram International) investment and in no way reflects the current state of our partnership, ”a Ripple spokesperson told CoinDesk.
The sales are still in progress, according to the spokesman, who didn't respond to a question asked via email about what the company plans to do with the proceeds from the sale of the shares.
Ripple completed the purchase of a $ 50 million stake in MoneyGram in November 2019.
As of the end of the third quarter of 2020, Ripple had paid MoneyGram $ 9.3 million, which is listed as "market development fees" in MoneyGram's latest financial report, for the use of Ripple's XRP-based settlement network, On-Demand Liquidity ( ODL)) network (formerly known as xRapid).
MoneyGram has been using this cross-border solution since June 2019 for transactions in Europe, Australia and the Philippines, for which Ripple has paid MoneyGram at least 52 million US dollars. The remittance company piloted Ripple's flagship cryptocurrency in 2018.
“We will remain a significant shareholder in MoneyGram after the sale – they are clearly leaders in global payments in over 200 countries and territories. In just over a year we've made incredible strides and look forward to continuing to work with MoneyGram to transform cross-border payments, ”said the Ripple spokesman.