TLDR
- VivoPower will acquire $100 million of Ripple shares, boosting XRP treasury.
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The purchase offers an implied XRP price of $0.47, a steep discount.
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VivoPower aims to reduce XRP acquisition costs through Ripple share purchases.
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Ripple’s diversified business units add value to VivoPower’s investment strategy.
VivoPower International PLC, a Nasdaq-listed company, announced a strategic move to enhance its XRP-focused digital asset treasury by acquiring $100 million worth of privately held Ripple Labs shares. This acquisition is part of the company’s broader strategy to gain exposure to Ripple’s equity and its XRP token holdings.
The agreement, still pending approval from Ripple’s executive management, involves VivoPower purchasing Ripple shares directly from current shareholders. This acquisition will make VivoPower the first publicly listed company in the United States to offer its investors exposure to both Ripple shares and XRP tokens, giving shareholders a unique opportunity to benefit from the growth of the Ripple ecosystem.
VivoPower Strategy to Acquire Ripple Shares
VivoPower’s purchase of Ripple shares will be complemented by direct XRP token acquisitions, as part of the company’s strategy to build a comprehensive treasury. This dual approach is designed to maximize the yield while minimizing the cost of acquiring XRP.
According to VivoPower’s management, for every $10 million spent on Ripple shares, an estimated $5.15 in value could accrue to VivoPower shareholders, depending on the market volatility of the assets involved.
Kevin Chin, Executive Chairman and CEO of VivoPower, explained,
“Our portfolio construction strategy is to buy a combination of Ripple shares and XRP tokens. This will allow us to optimize for yield maximization while also minimizing the weighted average cost of XRP acquired.”
Ripple’s Role in VivoPower’s Investment Plans
Ripple Labs, known for its creation of the XRP token, has become a major player in the digital asset space. Ripple controls around 41 billion XRP tokens, which account for approximately 41% of the total supply. VivoPower’s acquisition of Ripple shares is based on the valuation of Ripple’s XRP holdings, which are currently worth about $135 billion at market prices.
By purchasing Ripple shares at a valuation of approximately $19 billion, VivoPower is effectively acquiring XRP tokens at an implied price of $0.47 per token, an 86% discount compared to current market prices.
This strategic acquisition could provide VivoPower with a substantial financial advantage, allowing the company to accumulate XRP at a much lower cost than purchasing the tokens directly from the market.
Ripple’s Diversified Business Units Add Value
Ripple’s business model extends beyond just the XRP token. The company operates a number of business units, including RLUSD, a stablecoin, and a digital assets prime broker called Hidden Road. Additionally, Ripple has custodianship services through MetaCo and Standard Custody & Trust, and it recently acquired Rail, a stablecoin payment platform.
These business operations further enhance the value of Ripple shares, offering VivoPower potential exposure to various revenue streams beyond just XRP.
Adam Traidman, former Ripple board member and Chairman of VivoPower’s Advisory Board, remarked, “By purchasing Ripple shares, VivoPower not only acquires XRP at a significant discount, but it also gains a stake in Ripple’s growing stablecoin business and its other initiatives.”
Custody and Compliance Measures
To manage and protect the Ripple shares, VivoPower has partnered with leading digital asset custodians and infrastructure providers.
BitGo, a prominent digital asset custodian, will oversee the secure storage of Ripple shares, while Nasdaq Private Market, the preferred partner for Ripple share transactions, will facilitate the execution of this deal.
An independent auditor will also conduct quarterly reviews of VivoPower’s Ripple holdings, ensuring transparency and compliance with regulations. VivoPower’s partnership with these trusted entities highlights the company’s commitment to safeguarding its digital asset investments and ensuring the integrity of its treasury strategy.
