The recent initial public offering (IPO) of a prominent cryptocurrency exchange has experienced overwhelming interest, being oversubscribed by 20 times, according to reports. The decision was made by the exchange and its banking team to set a cap on the IPO proceeds at $425 million, a somewhat atypical move in such financial activities.
Originally, the plan was to raise $317 million, valuing the company at around $2.22 billion. The intention was to offer approximately 16.67 million shares at a price range of $17 to $19 each. However, due to heightened demand from investors, the offering price was revised, ultimately increasing to a proposed range of $24 to $26 per share. Following this, further adjustments led to an updated price of $28 per share while decreasing the total number of shares to 15.18 million. This progression of adjustments has clarified the imposed cap on the IPO.
If the company were to proceed at the highest proposed price point, it would lead to a market capitalization exceeding $3 billion. The shares are expected to begin trading on the Nasdaq in the upcoming session.
A filing with the Securities and Exchange Commission (SEC) indicated that without the cap, the IPO could have generated up to $433 million. This estimation did not include an additional $50 million that was secured from Nasdaq in a private placement deal.
The timing of the IPO aligns with a bullish sentiment surrounding cryptocurrency-related offerings, with other notable successes seen earlier this year, including IPOs from a stablecoin issuer and a brokerage firm heavily involved in crypto trading.
Though one of the companies, the stablecoin issuer, is seeing its shares trade above the initial price, there has been a significant drop from the peak levels achieved shortly after their debuts. The other firm has experienced a decline of around one-third of its debut value.
Another cryptocurrency exchange that went public recently is also experiencing a similar trend. Although it had a strong IPO, its shares now trade approximately 20% lower than their initial value.
Established in 2014, the cryptocurrency exchange has built a reputation as a regulated platform catering to U.S.-based investors. Despite facing hurdles like disputes with a bankrupt lender and scrutiny from regulators, the company continues to strive for growth amid a competitive landscape.
Earlier in the year, the SEC wrapped up its investigation into the exchange, allowing for the settlement of a $5 million lawsuit with the Commodity Futures Trading Commission, thereby removing significant barriers to entering the public market.