Leading Wall Street institutional funds, including Citadel Securities and Fortress Investment Group, were among the financial giants in the $500 million share sale deal in November as Ripple’s IPO pans out. They also backed the firm at a $40 billion valuation, which is a record for a digital-asset company. However, the structure of the deal has caught the attention of the market, as they claimed Ripple’s structure and success are tied to 90% XRP.
Therefore, they cited that they’re betting more on a single cryptocurrency than on the fintech company as a whole. For this reason, the sale agreement seeks several safety nets and crucial protections. It includes the right to sell shares back to Ripple at a guaranteed return price. The agreement also seeks preferential treatment if a major event like bankruptcy or sale occurs. Fortress Investment Group and Citadel Securities have assessed that 90% of Ripple’s net asset value is derived from XRP.
So the $500 million Wall Street funds are more of a bet than an investment in Ripple’s IPO. The institutional clients have already hedged their money even before the stock went live, protecting their capital. Ripple currently holds $124 billion worth of XRP, but most of the tokens are subject to lockup, escrow, and gradual release.
Also Read: XRP ETFs Fastest To Hit $1B, Ripple CEO Confirms Rising Retail Demand
Wall Street Places Conditions For Ripple IPO Investment: Cites XRP as The Reason
Wall Street’s agreement states that they can sell shares back to Ripple at a guaranteed annualized return of 10%. They can sell their shares back to Ripple after three or four years if things don’t pan out well. However, Ripple’s IPO is yet to be out, and the fintech company has not provided a launch date. The company’s President, Monica Lang, said in an interview that “We do not have an IPO timeline.” On the other hand, Ripple’s XRP fell to the $2.05 level on Wednesday and is at risk of plunging to $1.90.