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Crypto group Galaxy Digital seeks to raise $500m in debt market


Galaxy Digital, the crypto financial services company founded by Mike Novogratz, is seeking to raise $500m in the debt market as digital asset companies race to tap investor enthusiasm surrounding the rapidly growing industry.

The Cayman Islands-domiciled group is one of the largest players in cryptocurrency markets, with operations including asset management, trading, investment banking and mining of new tokens. The planned fundraising comes after crypto trading platform Coinbase issued a $1.5bn bond in September.

Galaxy is seeking to raise the funds through a five-year convertible bond in which holders can exchange the debt for stock.

Novogratz, a former Fortress Investment Group executive, has said Galaxy is seeking to become the Goldman Sachs of crypto. The company is growing quickly, with net income rising in the third quarter to $517m, from $41.5m in the same three months last year. The increase was driven by gains in digital asset prices and by the group’s trading business, where net income rose by about 36 times to $361m.

The price of bitcoin, the most popular cryptocurrency, has increased more than 200 per cent during the past 12 months to about $57,000.

Galaxy is planning to use the proceeds of the fundraising for expanding its asset management business with the launch of a new fund as well as expanding its mining operations and financing its rapidly rising headcount, according to a source close to the deal. The group expects to employ 850 people by the end of the year, up sharply from 222 in December 2020.

Some of the new funds raised will also go towards growing Galaxy’s trading and markets business, where it is planning to expand its derivatives operations. Galaxy serves only professional investors and it has no plans to break into retail markets, according to the person familiar with its plans.

The company has also applied to the US Securities and Exchange Commission to become a US-domiciled company with headquarters in New York at a time when US regulators and lawmakers are still laying the groundwork for what rules will apply to the crypto industry.

Galaxy expects the corporate restructuring to close by the end of the first quarter. The convertible bond deal, which is being done through a private placement, is expected to close in December this year, pending approval from the Toronto Stock Exchange, where Galaxy’s shares are listed.



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