According to a MoneyGram press release published on Monday, November 25th, Ripple has made a $20 million investment in the company’s equity, purchasing shares at $4.10 apiece, which is a 37% premium to MoneyGram’s current share price of $3.00 on the Nasdaq.
This recent investment makes good on a promise that Ripple made earlier this year when it revealed that it would invest a total of $50 million in MoneyGram by starting off with a $30 million injection.
With this, “Ripple will own 9.95 percent of the outstanding common stock of MoneyGram, and approximately 15% on a fully-diluted basis including non-voting warrants held by Ripple,” the release states.
How is Ripple Benefiting MoneyGram?
The two companies’ partnership is predicated on the use of one of Ripple’s flagship payment services products, xRapid, which has been rebranded to On-Demand Liquidity (ODL) over the past year.
ODL, for those unaware, is a solution built on RippleNet that allows financial institutions the ability to issue cheap, reliable, 24/7, and near-instant transactions through XRP, which acts as the bridge between institutions. As Ripple’s website on the ODL product reads:
RippleNet provides an alternative. While any financial institution on the network enjoys reliable, instant and lower-cost transactions, those who use the digital asset XRP to source liquidity can do so in seconds—freeing up capital and guaranteeing the most competitive rates available today.
“Our partnership with Ripple is transformative for both the traditional money transfer and digital asset industry – for the first time ever, we’re settling currencies in seconds… Partnerships with companies like Ripple support innovation and allow us to invest in creating better customer experiences. I anticipate furthering our growth into new corridors and exploring new products and services.”
MoneyGram’s stock, which trades under the ticker “MGI” through Nasdaq, is up by 100% since the announcement of its partnership with Ripple, presumably partly due to the backing of a large fintech company and the increased revenues brought in by ODL.
More Deals in the Works
Seeing the success with MoneyGram, Brad Garlinghouse, the chief executive of the fintech firm, is looking to continue to make more deals. Speaking with Yahoo Finance a month after the MoneyGram deal, he said:
“We’re in a very strong position, our business is growing strongly, we have a strong balance sheet, and I intend to press our advantage.”
The “strong balance sheet” comment is likely in reference to Ripple’s sale of XRP to institutional clients and exchanges, which is the controversial way that the company has funded its operations and business deals.
While Garlinghouse did not touch on specific companies that Ripple is looking to join hands with, he asserted that deals will be made with companies that satisfy the needs of Ripple’s customers:
Anything we can do to accelerate our growth and give us more capabilities that serve customer needs is a good place to be… We’re probably the largest investor in blockchain and crypto on the planet. We’ve publicly announced we’ve made about $500m [of investments] in the space over the last 18 months.