The vocal and outspoken manager of hedge funds has marked a significant accomplishment for this year. Mike Novogratz was able to conduct a successful raise of 250 million dollars to fund the proposed operation of Galaxy Digital, a bank that aims to be focused on cryptocurrencies and will serve as a merchant bank. Furthermore, this venture will be a publicly traded company in the country of Canada.
What is a merchant bank?
The concept of a merchant bank in the crypto industry shows that there is further progress and maturation taking place. According to Investopedia, merchant banks focus more on the sector of international finance; they provide business loans and conduct underwriting. In addition to these activities, these types of banks deal with companies that are not ready to raise large funds from the public, merchant banks, instead, use more creative ways of conducting their financing. These banks assist businesses in the issuance of securities in the private markets through the concept of private placement. An important aspect of private placement is that there are less regulatory constrictions in this market, mostly because there are stringent requirements on the type of investors that can participate in this field.
Galaxy Digital and the $250 Million Raise
Bloomberg notes that this was an interesting raise because it happened in sort of an ice age for the cryptocurrency market. Markets have been dipping since the turn of the year and have only seen slight sprinklings of upticks now and then. The market is fairly up as February progresses onwards yet it still has to recover to the highs of glorious yesterdays past. The price of Bitcoin is trading around the $8,000 mark at the time of this writing.
Of course, large investors like Mike Novogratz and others stated last year that there would be a possible correction in the markets that would soon be arriving and did their planning accordingly.
At times, it may be wise to take action in bearish markets, as Facebook and other companies were launched after the dot-com bust when many people were keeping busy licking their wounds.
This current round of funding may have been more successful because this was conducted through a private placement, and the names of the participating investors are not revealed to the public at this present time. It looks like the prior executive of Fortress, Novogratz will be consolidating most of his cryptocurrency and blockchain based allocations into the new entity.
Galaxy Digital was able to surpass its initial funding target of two hundred million dollars. The bank will be making immediate moves with the capital raised, the team at Galaxy Digital will be purchasing a Canadian business called First Coin Capital. After the purchase, the firm will seek to merge with a TSX publicly traded company through a process known as a reverse merger. They are looking to be publicly traded by the end of this initial quarter.
Galaxy Digital has large ambitions; the cryptocurrency merchant bank is seeking to become a significant player in this space, they are looking to becoming the Goldman Sachs of the cryptocurrency world.
The bank will be comprised of several divisions, one of them, which will be a trading desk focused on the crypto sector. They will also have an allocation for venture capital and have already partnered with Block.one to deploy an EOS.IO Ecosystem fund. There are more services in the works thus making the firm a full services bank serving wealthy individuals and institutional investors.