Invest2 publishers2 min readPublished
Evernorth takes a $1 billion XRP treasury to Nasdaq with about $300 million of it in cash
Armada Acquisition Corp. II shareholders approved the Evernorth merger, so a 473 million XRP treasury lists on Nasdaq as XRPN on Oct. 8. Only about $300 million of the $1 billion-plus raised is cash, and investors contributed XRP directly for much of the rest.
The Investor · Invest desk
What happened
- The business combination with the blank-check company is expected to close on Oct. 7.
- The cash comes from $225 million of private placements, $30 million of convertible notes and about $48 million of trust proceeds, all before expenses.
- Evernorth's backers include Ripple, Pantera Capital, Kraken, SBI Group, GSR and Arrington Capital.
- Ether Machine dropped its planned SPAC merger with Dynamix in April, citing market conditions and ending a planned $1.5 billion yield-bearing Ether fund.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- exposure Buyers of XRPN take on XRP's price swings at scale, since every 10-cent move in the token changes the value of Evernorth's holdings by about $47 million.
- constraint Convertible notes are about 3% of the raise, so debt adds little gearing; any sensitivity to XRP beyond the tokens themselves would have to come from the share price.
- constraint Whatever open-market XRP buying this deal funds is limited to its cash after expenses, so the listing adds less fresh demand for the token than the $1 billion headline suggests.
The three cash pieces add up to $303 million [1], in line with the roughly $300 million the company gave [5]. Against a raise of more than $1 billion [2], that leaves roughly $700 million, about 70% of the total, that did not arrive as cash [2]. Investors contributed XRP directly [6]. The plan was first unveiled around a $685 million XRP stash [9], close to that non-cash figure.
Most of what XRPN holders will own, then, is coins that Evernorth's investors already held, moved into a listed company. The deal grew out of a Ripple-backed effort to raise $1 billion to accumulate the token [18]. The reports do not say how many shares will be outstanding or how much of the cash will go to buying more XRP.
"Going public will offer investors a regulated, transparent way to own XRP exposure and participate in the growth of the blockchain economy," said Asheesh Birla, Evernorth's founder and CEO [8]. The template is the one Michael Saylor's Strategy built with Bitcoin, in which a public company raises capital to stockpile a single asset and its share price follows that asset [11]. Evernorth's stated yardstick is XRP per share, which it plans to grow through yield strategies, ecosystem participation and capital-markets activity [10].
From the first trade on Oct. 8 [3], the stock can go a few ways. If it trades above the value of its tokens, Evernorth can sell shares and buy XRP with the proceeds, raising the count per share. If it trades at or below that value, selling stock dilutes the count, and the plan leans on yield. In both cases the company's fortunes track XRP, which can swing sharply in either direction, as Decrypt noted [12].
Clearing the vote is where other treasury deals have stalled this year. In July, Adam Back's Bitcoin Standard Treasury Company and Cantor Equity Partners I scrapped their original merger terms and postponed a shareholder vote indefinitely while negotiating a deal that would "better reflect market conditions," Cointelegraph reported [14]. Evernorth says all of its committed funders are participating [7]. Crypto companies outside the treasury category did finish SPAC listings: Securitize on the NYSE in July, and CoinShares on Nasdaq in April after a $1.2 billion merger [17].
I think XRPN will trade on the value of its tokens, and the first stock sale after listing will show whether the per-share plan works. If the shares settle below the worth of 473 million XRP [4], each new share issued shrinks XRP per share, and Evernorth's growth plan rests on yield.
What to watch
- Whether XRPN opens on Oct. 8 above or below the market value of its 473 million XRP.
- Evernorth's first share or convertible issuance after listing, and whether XRP per share rises or falls as a result.
- A disclosed share count and a breakdown of how much of the roughly $300 million in cash goes into buying XRP.