Bakkt To Become Publicly Traded Via Merger
Intercontinental Exchange, a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announced that Bakkt Holdings, LLC (“Bakkt”), the transformative digital asset marketplace launched in 2018 by ICE and a marquee group of investors and strategic partners, has entered into a definitive agreement to combine with VPC Impact Acquisition Holdings (NASDAQ: VIH), a special purpose acquisition company sponsored by Victory Park Capital (“VPC”).
The business combination between Bakkt and VIH values the combined company at an enterprise value of approximately $2.1 billion and is expected to result in over $500 million of cash on the combined company’s balance sheet, reflecting a contribution of up to $207 million of cash held in VPC Impact Acquisition Holdings’ trust account, and a $325 million concurrent private placement (PIPE) of Class A common stock of the combined company, priced at $10.00 per share, including a $50 million commitment from ICE. The newly combined company will be renamed Bakkt Holdings, Inc. and will be listed on the New York Stock Exchange.
Bakkt, the Digital Asset Marketplace Launched by Intercontinental Exchange in 2018, to Become a Publicly Traded Company via Merger with VPC Impact Acquisition Holdings https://t.co/7Ut9iaeX3w
— Bakkt (@Bakkt) January 11, 2021
As part of the transaction, Bakkt’s existing equity holders and management will roll 100% of their equity into the combined company. Assuming no shareholders of VPC Impact Acquisition Holdings exercise their redemption rights, current Bakkt equity holders, including ICE, will own approximately 78%, VPC Impact Acquisition Holdings public shareholders will own approximately 8%, VPC will own 2%, and PIPE investors (a group that will also include ICE) will own approximately 12% of the issued and outstanding common stock of the combined company at closing.
Additional details on the impact to ICE’s financials are below:
Transaction Impact on ICE Financials
- ICE’s fourth quarter 2020 net revenues related to Bakkt are expected to be approximately $9 million while GAAP and adjusted non-GAAP operating expenses related to Bakkt are expected to be approximately $39 million and $22 million, respectively. First quarter 2021 net revenues related to Bakkt are expected to be approximately $7 million while GAAP and adjusted non-GAAP operating expenses related to Bakkt are expected to be approximately $25 million and $23 million, respectively.
- Following completion of the business combination, which is expected to be in the second quarter of 2021, ICE is expected to have a 65% economic interest and a minority voting interest in the combined company. Prior to the closing, Bakkt revenues and operating expenses will continue to be reported within ICE’s consolidated net revenues and operating expenses.
- In addition, beginning with ICE’s first quarter 2021 financial results, the impact of equity method investments will be excluded from ICE’s adjusted non-GAAP results. The non-cash contribution from ICE’s equity method investments are currently reported in ICE’s non-operating income and include ICE’s 40% stake in the OCC. Following the closing of the proposed business combination with Bakkt, ICE will have a minority voting interest in the combined company and the combined company will be reclassified as an equity method investment of ICE and will therefore not be consolidated within ICE’s financial statements.
Currently the same digital token can have multiple different identifiers.
Some hedge funds investing in decentralized finance have already achieved 100% returns.
Costs and benefits of real-time settlement need full analysis.
Increasing demand for cryptocurrency from institutions will be a theme in 2021.
Enabling the use of digital assets is critical to the future of custody.