The operator of the New York Stock Exchange (NYSE) and the owner of Bakkt digital asset platform, Intercontinental Exchange (ICE), has reportedly sold its 1.4% stake in the newly Nasdaq-listed crypto company Coinbase. The move comes as the company aims to reduce its debt.
While announcing the news on April 29 on financial results call for the first quarter of 2021, ICE chief financial officer Scott Hill said that the firm sold its Coinbase stake for about $1.2 billion. The executive said that the sale generated nearly $900 million net after taxes.
Hill stated that the proceeds were used to reduce ICE’s debt at the end of the first quarter. He noted that the firm’s pro forma leverage, or cumulative indebtedness rate, would have been near 3.6x compared to 4.2x when ICE purchased mortgage-focused software firm, Ellie Mae, in September 2021.
ICE’s incoming CFO Warren Gardiner added:
“We are definitely a bit ahead of schedule, been paying down debt faster than we sort of expected when we started the deal. I mean I would say we were doing that, though, before the Coinbase sale.”
Sale Made To Raise Funds
He insisted that the Coinbase money gave the company some more flexibility as ICE moves into the rest of the financial year. He mentioned:
“We are down to about 3.6 leverage, the target is about 3.25, where we can start to think about buying back stock.”
ICE’s decision to sell Coinbase shares comes as the firm posted record revenues in Q1 2021 totaling $1.8 billion and up 4% year-over-year. The CFO stated:
“First quarter revenues, operating income, adjusted net income and adjusted earnings per share were all the best in the history of our company.”
He said that, while ICE’s cumulative transaction revenues slightly plunged compared to last year, the amount of total recurring revenues increased by about 9%. Based on previous reports, ICE’s digital asset trading platform, Bakkt, is scheduled to go public on NYSE in Q2 2021 via a merger with VPC Impact Acquisition Holdings.
Coinbase, the largest crypto exchange in the United States went public on Nasdaq on April 14 with a direct listing of its COIN shares. These shares opened at $381, marking increased institutional demand as this stock’s pre-listing reference price was $250. Notably, the Coinbase stock closed Thursday trades at $294, after a slow decline from the listing, based on data from TradingView.
Based on previous reports, many COIN investors including the Coinbase executives sold up to $5 billion in COIN stocks shortly after the listing. Significant sales included those by the Coinbase CEO Brian Armstrong, who sold almost 750,000 shares netting a total of nearly $292 million.