The cryptocurrency trading platform Bakkt, owned by the Intercontinental Exchange (ICE), is planning to go public on the New York Stock Exchange (NYSE) via a merger with VPC Impact Acquisition Inc., a special purpose acquisition company (SPAC) sponsored by Victory Park Capital (VCP).
A SPAC is a company with no commercial activities but is formed for the sole purpose of taking companies public without going through the traditional initial public offering (IPO) route. In a way, SPACs are created to merge with other companies and raise money for them.
After the merger between the two firms, a new company called Bakkt Holdings Inc. will be formed.
Bakkt announced entering into a definitive agreement with VPC Impact Holdings that will see the combined company having a valuation of $2.1 billion. The deal is expected to go through in Q2 2021.
Bakkt, which started off as a trading platform for bitcoin futures, was launched in 2018 and its founding team comprised of ICE CEO Jeffrey Sprecher and his wife Kelly Loeffler who served as the first CEO.
Loeffler left the position to assume a seat in U.S. Congress.
Gavin Michael, who served as the head of technology at Citi’s Global Consumer Bank, will join Bakkt as the CEO effective immediately.
Michael takes over from Bakkt’s interim CEO David Cliffton who will join the combined company’s Board of Directors.
“I’m thrilled we were able to partner with the fintech experts at VPC on this pathbreaking deal and look forward to watching Gavin and his colleagues bring Bakkt to the next level,” said Sprecher.
Bakkt provides a wide range of services
The company is a regulated trading platform but has failed to garner substantial trading volumes for its contracts. It still lags behind market leader the Chicago Mercantile Exchange (CME) which launched its futures contracts in 2019.
Bakkt was initially created to provide Bitcoin warehousing services but has since expanded its scope of business activities.
The firm supports over 30 loyalty program sponsors and more than 200 gift card merchants.
At its launch, Bakkt named software giant Microsoft and coffeehouse chain Starbucks as partners. The company launched a digital wallet that has been integrated by Starbucks as a payment method for customers to reload their Starbucks Card in the Starbucks app.
Bakkt has raised at least $482.5 million from several investors including Boston Consulting Group, Goldfinch Partners, and Microsoft’s venture capital arm M12. The company raised $300 million last year to finance the acquisition of Bridge2 Solution.
Bakkt’s announcement comes after Coinbase, America’s largest cryptocurrency exchange by traded volume, filed paperwork with the U.S. Securities and Exchange Commission (SEC) for an IPO.