Online Brokerage Webull Shed Crypto Exposure Ahead of SPAC Deal
(Bloomberg) — Webull Corp.’s efforts to list in the US were hampered by the online brokerage offering cryptocurrency to its users, according to the firm’s US chief executive officer, as the company prepares to go public by merging with a blank-check vehicle.
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The online broker platform agreed a deal with SK Growth Opportunities Corp. that gives the combined company a pro forma enterprise value of about $7.3 billion, the firms announced Wednesday. The expected listing on Nasdaq, after clearing shareholder and regulator approvals, would follow several attempts to go public via an initial public offering, according to group president and US CEO Anthony Denier.
“For different reasons we were unsuccessful,” Denier told Bloomberg News. “I can name a few, and I think the latest one is crypto exposure. The SEC not been friendly, which is widely known.”
Webull, whose founder Wang Anquan is a veteran of Chinese tech giants Alibaba Group Holding Ltd. and Xiaomi Corp., rolled out crypto trading on its platform in 2020, as it was gaining market share from rivals such as Robinhood Markets Inc.
Read More: Robinhood Loses Thousands of Traders to a China-Owned Rival
Webull sold its digital asset business and removed its crypto offerings from its platform globally at the end of the third quarter, Denier said. The decision to remove crypto trading from its platforms was also motivated by regulatory uncertainty regarding how the SEC wants registered broker dealers to operate in the crypto space, he said.
A representative for the US Securities and Exchange Commission said it does not comment on individual entities.
Webull has 20 million registered users and operates in 15 regions globally, with $370 billion worth of equity notional volumes, according to the statement. The company inked an agreement in 2021 to become the official basketball jersey patch partner for the NBA’s Brooklyn Nets and to be featured on the jerseys of the WNBA’s New York Liberty.
Valuation Upfront
For Webull, there are other reasons why a merger with a blank-check firm is appealing.
Unlike a traditional IPO, a SPAC deal “allows us to come to an agreement with the SPAC for valuation upfront rather than valuation at the end of the process,” Denier said.
SK Growth Opportunities’s CEO, Richard Chin, is the former president of South Korean memory-chip maker SK Hynix Inc., and the special purpose acquisition company counts former House Speaker John Boehner among its directors. The blank-check firm raised nearly $210 million in its 2022 IPO.
The SPAC tie-up with SK Growth Opportunities is expected to bring in as much as $100 million, subject to redemptions. More than half of SK Growth shares were redeemed in December.
Shares of the SPAC rose as much as 6% on Wednesday in New York to trade as high as $11.49 each following the announcement.
The company had roughly $565 million of cash on its balance sheet, indicating that Webull isn’t as cash constrained as many so-called de-SPACs that have spiraled or gone bankrupt.
Denier said that he aims for shares to begin trading on the Nasdaq stock exchange in the second half of 2024. As it stands, the takeover must be completed by the end of September unless the SPAC can get shareholders to extend the deadline for a second time.
–With assistance from Austin Weinstein.
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