Ripple Labs Inc. is selling 4 million of its shares in Moneygram, or about a third of its total shareholding in the company.
The decision seems in part to be motivated by the surging Moneygram share price and Ripple’s desire to cash out after buying the shares at a premium of $4.10 in 2019.
At close on Nov. 27, shares of Moneygram were down 4.8 percent at $7.42 on the Nasdaq Stock Exchange. However, the stock has soared 260 percent year-to-date, rising from $2.06 on Jan. 2.
Ripple will earn nearly $30 million if it sold its 4 million Moneygram shares at current market prices – an almost 50 percent gain. However, the sale is still in process.
A Ripple spokesperson was quoted by industry publications as saying, “this is purely a judicious financial decision to realize some gains on Ripple’s Moneygram International investment…” The spokesperson added that the sale “is in no way a reflection of the current state of our partnership.”
According to a U.S. Securities and Exchange Commission filing on Nov. 27, Ripple owns an 8.6% equity stake in the global remittance behemoth Moneygram. That’s the equivalent of 6.24 million shares.
Ripple, the issuer of the eponymous XRP cryptocurrency, has the option to buy an additional 5.96 million shares under a warrant. If exercised, that option would bring Ripple’s total shareholding to 12.2 million shares or about 17 percent of Moneygram’s shares outstanding.
Ripple has now put up the 4 million shares for sale. The shares represent about a third of its entire stake in Moneygram when the warrant shares are included. Excluding those, Ripple will still own 2.24 million shares or 3.1 percent of Moneygram’s shares outstanding. Counting in the additional warrant shares, that would rise to an 11 percent stake.
Ripple completed a $50 million investment in Moneygram in November 2019, in what was touted by the two entities as a strategic partnership. At a premium price of $4.10 per share at the time of the purchase, the $50 million investment adds up to exactly 12.2 million shares – the total number of shares Ripple holds in Moneygram, inclusive of the additional warrant shares.
Moneygram uses Ripple’s XRP-based settlement network, the On-Demand Liquidity (ODL) network, to facilitate remittances in Australia, Europe, and the Philippines.