Mike Novogratz founded the crypto financial services firm named Galaxy Digital, and they are now seeking to raise money in the debt market of about $500 million. This move comes as digital asset firms are racing to tap into the enthusiasm of investors pertaining to the rapidly expanding crypto industry. The group is domiciled in the Cayman Islands and is one of the largest players in the crypto space and its operations include investment banking, trading, and asset management, along with mining of new tokens. This planned fundraising comes after a $1.5 billion bond was issued by crypto trading platform Coinbase back in September.
Galaxy wants to use a five-year convertible bond for raising the funds, which will allow holders to exchange their debt for stock. A former executive of Fortress Executive Group, Novogratz has said that his company wants to become the Goldman Sachs for the world of cryptocurrency. The company appears to be growing quickly, as its net income rose to $517 million in the third quarter from $41.5 million in the same quarter last year. This gain was primarily due to the increase in the prices in the digital asset market and by the trading business of the group, where net income increased to $361 million.
This is an increase of almost 36 times. There has been a 200% increase in the price of the most popular crypto in the market i.e. Bitcoin in the last year, as it has reached $57,000. Galaxy wants to expand its asset management business and it will use the proceeds from the fundraising for launching a new fund in order to do so. Plus, it also wants to expand its mining operations and finance its rapidly increasing headcount. By the end of the year, the Galaxy Digital Group plans to employ about 850 people, which would be a sharp climb from 222 people back in December of last year.
Some of the raised funds will also be used for the company’s growing trading market business, as it plans on expanding its derivatives operations. The company is currently only catering to professional investors and does not have any immediate plans of expanding into retail markets. Galaxy Digital also wants to be a US-domiciled firm, due to which they have applied to the Securities and Exchange Commission (SEC) in the US and would have headquarters in New York. This comes at a time when lawmakers and regulators are still trying to lay down some groundwork for the rules that would govern the crypto industry.
Galaxy believes the corporate restructuring would come to an end by the end of the first quarter. A private placement is being used for the convertible bond deal and will close in December 2021, after approval from the Toronto Stock Exchange, as that’s where the company’s shares are listed. The funds the company will raise from this deal would undoubtedly come in handy and can be used for further expanding the business. It also marks the rapid growth of the crypto industry itself, which as seen tremendous increases this year.