- Ripple will sell roughly one third of its shares in MoneyGram.
- The cooperation with MoneyGram is to continue without restrictions.
According to a document published on Friday by the US Securities and Exchange Commission (SEC), Ripple Labs is selling about one third of its stake in the remittance giant MoneyGram. According to the form, on November 25, Ripple Labs entered into an agreement with MoneyGram under which it is entitled to sell up to 4,000,000 shares of common stock. This option will expire “upon the earliest of March 31, 2021, the time at which the maximum amount shall have been sold, or the occurrence of certain other customary events affecting the issuer”.
As CNF reported, Ripple completed its $50 million investment in MoneyGram last November. Ripple acquired the then newly issued shares of MoneyGram at a price of $4.10 per share, a significant premium over the former market price of MoneyGram.
After the investment, Ripple owned 9.95 percent of MoneyGram’s outstanding shares of common stock, and approximately 15 percent on a fully-diluted basis including non-voting warrants held by Ripple. The investment was intended to support MoneyGram’s business operations through the use of Ripple’s On-Demand Liquidity.
Ripple plans to sell one third of its MoneyGram shares
As also disclosed in the SEC document, Ripple owns approximately 6.23 million common shares and has sole voting and investment rights in respect of those shares. In addition, Ripple holds the warrants on 5.95 million common shares, representing a total equity position of 12.2 million shares or 17% of MoneyGram’s outstanding shares.
Taking these figures into account, Ripple is now considering the sale of one third of its entire holding, if one includes the shares represented by the warrant. After the sale, Ripple will own at least 3.22 million shares or 4.44% of MoneyGram. If the warrant is included, Ripple can still hold up to approximately 11% of MoneyGram if they buy up additional shares.
As a spokesperson for Ripple explained to CoinDesk, the decision is a purely financial decision. At a current share price of USD 7.42 per share, Ripple has achieved an 80% gain.
Ripple is a proud partner in MoneyGram’s digital growth transformation. This is purely a judicious financial decision to realize some gains on Ripple’s MGI [MoneyGram International] investment and is in no way a reflection of the current state of our partnership.
In addition, Ripple’s spokesperson also stated that sales are still ongoing. Ripple also confirmed that it will continue its cooperation with MoneyGram:
We will remain a significant shareholder in MoneyGram following the sale – they are clearly a leader in the global payments space in over 200 countries and territories. In just over a year, we’ve made incredible progress and look forward to continuing to work alongside MoneyGram to transform cross-border payments.
Remarkably, over the past year, Ripple has consistently made large payments to MoneyGram. As recently as the 3rd quarter, the San Francisco-based company paid $9.3 million to MoneyGram as “market development fees” for On-Demand Liquidity (ODL). In the quarter before, Ripple even paid $15.1 million. The firm has been making these payments since the beginning of the deal with MoneyGram to promote the adoption of XRP and On-Demand Liquidity.