Intercontinental Exchange Merger Paves the Way for New Finance App

The Intercontinental Exchange (ICE) is taking its cryptocurrency venture, Bakkt, public. This move will help bring ICE closer to achieving its goal of launching an app for consumers for trading and making payments with digital assets.

ICE is bringing Bakkt public by entering into a definitive agreement to merge Bakkt with VPC Impact Acquisition Holdings, a special purpose acquisition company sponsored by Victory Park Capital.

The deal brings together two major players in the cryptocurrency market while the market is surging. Last week the most prominent cryptocurrency on the market, Bitcoin, rose above $40,000 for the first time. Additionally, SPACs had their biggest year ever in 2020, raising a record $83 billion in new listings.

The deal between Bakkt and VIH means the companies are now valued as a combined company at an enterprise value of approximately $2.1 billion.

The merger is expected to result in over $500 million in cash on the combined company’s balance sheet. This number reflects a contribution of up to $207 million in cash held in VPC Impact Acquisition Holdings’ trust account. Bakkt will raise an additional $532 million from VPC’s funds and a concurrent capital raise. These funds will support the development and marketing of the proposed Bakkt App.

Part of the deal is a $325 million concurrent private placement of Class A common stock of the combined company. The stock is priced at $10.00 per share and includes a $50 million commitment from ICE.

The digital assets that Bakkt hopes to manage with the proposed app are not just Bitcoins but also other digital assets that extend to loyalty points and reward programs, like those offered by Starbucks Corp. and airlines, and virtual assets from videogames.

“The average consumer holds a wealth of digital assets but rarely tracks their value and lacks the tools to manage and utilize them. I’m excited to join the management team of a company, at this important time in its expansion, whose vision is to bring trust and transparency to digital assets through innovation and technology and, through that process, unlock trillions of dollars currently held in customer and loyalty accounts and allow consumers to put them to work,” said Gavin Michael the incoming CEO of Bakkt.

Currently, more than 400,000 people preregistered for the app, which Bakkt said is expected to have a comprehensive public rollout in March. Bakkt also projects that the app will amass more than 30 million users within five years, according to a presentation about the deal. The targeted user base numbers would put Bakkt in the same league as other blockbuster financial apps such as Robinhood, Venmo, or Square’s Cash App.

“For the past 20 years, I’ve been privileged to work with great people to bring one great company to the public markets and watch it grow from there, and today I’m equally proud to see another great idea born within ICE, and shepherded by another great team, enter into a transaction that will allow it to become publicly traded. 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 Jeffrey C. Sprecher, Founder, Chairman, and CEO of Intercontinental Exchange.

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