Crypto Exchange Bullish Plans to Go Public Via SPAC Valued At $9B

Cryptocurrency exchange Bullish has made an announcement that it plans to go public on the New York Stock Exchange through a merger with Far Peak Acquisition Corp, a special purpose acquisition firm (SPAC), in a $9 billion deal.

Bullish, a Block.one blockchain software firm, plans to establish a regulated crypto exchange later this year to enable institutional and retail investors to generate yield for their cryptocurrencies.

Through the merger deal, Bullish expects to get an estimate of $600 million in proceeds from Far Peak and another $300 million through private investment in public equity (PIPE). Prominent investors participating in the PIPE include Mike Novogratz’s crypto firm Galaxy Digital and BlackRock, the world’s largest asset manager.

Combining Bullish with Far Peak firm is said to have a pro forma equity value of about $9 billion. 

"Bullish's entry into the public markets allows our customers to take part in Bullish by holding a piece of our company, without any of the regulatory uncertainties or jurisdictional limitations of a profit-sharing token issuance," Brendan Blumer, Block.one's CEO and the incoming chairman of Bullish.

Bullish began in May this year as a subsidiary of blockchain software company Block.one with backing from well-known investors, including prominent venture capitalist Peter Theil.

Meanwhile, Thiel’s companies, Founders Fund and Thiel Capital, participated in Bullish’s capital fundraising in May as well. Other investors who participated in Bullish’s fundraise include the US hedge fund manager Louis Bacon, British hedge fund manager Alan Howard, German investor Christian Angermayer’s Apeiron Investment Group, Japanese Nomura bank, and Galaxy Digital. The merger deal is scheduled to close towards the end of this year.

Far Peak is a SPAC firm whose focus is to bring major financial and fintech companies to the public.  Far Peak chairman and CEO Thomas Farley, who served as the president of the New York Stock Exchange in the past, will become the CEO of Bullish. 

Farley’s leadership at the crypto exchange is important given his experience with financial regulators from his time at the New York Stock Exchange. The development comes when additional regulations are likely as regulators across the globe are closely watching the crypto sector.

Why Crypto Firms Prefer SPAC Mergers?

SPAC mergers are becoming increasingly common for cryptocurrency firms to go public with exchanges such as eToro and lending financial technology firm SoFi merging with special purpose acquisition companies to go public.

Last week, June 9, Circle crypto firm announced plans to go public through a merger deal with Concord Acquisition Corp, A SPAC company.

There are reasons why most companies, such as crypto firms, opt to participate in SPAC deals rather than going public with a traditional IPO or taking private equity investment.

First, public firms trade at higher multiples than private firms; therefore, SPACs provide an opportunity for a higher valuation. The second reason is that while business owners lose some control when taking on private equity, SPAC allows them to maintain a significant stake in the firm.

Besides that, SPACs provide security in liquidity through capital raised in the initial public offering (IPO). SPACs are normally completed in just 2 to 3 months which is faster than traditional approaches, unlike traditional IPOs that can take up to 2 to 3 years to finalize.

Also, traditional IPOs are normally expensive to execute, while SPACs usually pay for most of the costs, thus saving a huge amount of funds for the company. Lastly, SPAC deals are made ahead of time, and both parties agree on their valuations rather than hopping when the window is open.