In a move which is expected to be announced in the coming days/weeks, digital asset service provider ‘Bakkt’ is said to be finalizing a merger with VPC Impact Acquisition Holdings (VPC). The move, first reported by Bloomberg, is believed to be in its final stages. If completed it would be what is known as a ‘reverse merger’.
Often times, a company seeking to attain certain approvals, will look to merge with a company that has already attained the goal. We have seen this in the past with companies such as Securitize becoming a broker/dealer by acquiring DTM and Velocity Platform. In this instance however, it is Bakkt looking to go public, through the acquisition of VPC Impact Acquisition Holdings – a company to have already gone public in September of 2020.
For a company such as Bakkt, which has already raised hundreds of millions from existing investors, why is such a merger necessary? Simply put – it is often a cheaper and quicker way for a company to go public, as opposed to hosting its own IPO.
These benefits are the sole reason VPC Impact Acquisition Holdings hosted its own IPO months ago. The company was created with the purpose and intent to go public, and subsequently be acquired by a promising company, such as Bakkt. At the time of its IPO, the company stated,
“The Company intends to pursue a business combination with a high-growth business in the Fintech industry with an enterprise value of approximately $800 million to $2 billion.”
Bloomberg notes in its report that insiders with knowledge on the matter believe that post-merger, the companies will see a valuation of roughly $2 billion USD.
A Thing of the Past
Dating back to mid-2018, Bakkt, was one of the most anticipated platforms geared to enter blockchain industry. While the company has come a long way since – becoming a popular service provider for BTC futures – it has experienced various hiccups along the way. Not only have multiple of the platforms expected services been delayed, but it has lost multiple CEO’s since its founding.
Hopefully, between the increasing popularity of the digital asset industry itself, increasing volumes of its custodial and futures services, and upcoming loyalty spending program, these struggles are a thing of the past for Bakkt.
Bakkt Taking The More Traditional Route
Aside from the aforementioned deal involving Bakkt, 2021 is shaping up to be a busy year for blockchain oriented companies looking to go public. There does however lay a difference in how most are approaching the task, with the majority going a more conventional route by hosting an IPO. The following are two examples of anticipated IPOs expected to occur at some point later this year.
If the event is approved by the SEC, it is believed by investment firms that a Coinbase IPO would see the company valued around $28 billion USD.
Days before Coinbase made its announcement, Sygnum, a Swiss digital bank based out of Zurich, announced the successful tokenization of its shares. This tokenization was completed in anticipation of an IPO taking place sometime in 2021.
This event will be particularly interesting to watch, as it will be one of the first instances of a company going public through the use of digital securities. The process, which is being aided by tokenization platform ‘Desygnate’, is expected to result in the tokenized shares being listed on various exchanges across both Switzerland and Singapore.