Stablecoin tech firm Circle is to go public in a merger deal with a special purpose acquisition company that will value the business at $4.5bn.
Circle will merge with Concord, the Spac backed by former Barclays boss Bob Diamond, and trade on the New York Stock Exchange under the ticker CRCL, the two companies said in an 8 July announcement.
Circle said it is the principal operator of USDC, a cryptocurrency tethered to the value of the dollar to limit its volatility, which has grown to more than $25bn in circulation. The crypto sector has struggled under intense price swings in recent months, as investor appetite for digital assets tumbled from earlier highs.
“Circle is the true pioneer of trusted digital currencies, an increasingly critical part of the global financial system. The firm has earned its exceptionally strong reputation building highly innovative blockchain-enabled products and services within the regulatory perimeter,” Diamond said in a statement.
Marshall Wace, Third Point, Adage Capital, Fidelity Management & Research Company and several accounts advised by Cathie Woods’ Ark Investment Management are to provide $415m in private investment for the deal. In all, the transaction is expected to generate up to $691m in gross proceeds for the combined company.
Jeremy Allaire, Circle’s chief executive, will remain at the head of the firm once the merger is complete.
“As we partner with major companies and financial institutions, and as people around the world interact with USDC, becoming a public company is a critical step in providing greater transparency as a firm,” said Allaire in a Twitter thread following the announcement.
“With scale and success comes greater expectations and the need for greater transparency. We also recognise that this is a journey, and that self-governance and regulatory models in this space will also evolve.”
Circle’s debut comes as fellow stablecoin business Tether has faced intense scrutiny over the way it backs up its dollar-pegged holdings with cash, after it claimed to back every Tether coin with dollars on a 1:1 basis.
Allaire said that Circle will provide a full picture of its business model and the reserves it holds to back USDC as a public company in due course.
Circle’s entry into the Spac market comes as such listings appeared to lose popularity with investors in recent months, after regulators such as the US Securities and Exchange Commission tightened the rules on how companies must treat the warrants issued as part of fundraising.
Fintech firm EToro is set to go public via a Spac later this quarter, as part of a $10.4bn tie-up with Betsy Cohen’s Fintech Acquisition Corp. EToro chief executive Yoni Assia told Financial News that regulators should seek to entice more retail investors into backing Spacs, as part of innovation plans for capital markets structures.
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