BlackRock looks to acquire 10% of the Circle’s IPO shares

BlackRock is reportedly set to spend a huge amount to purchase shares in the upcoming IPO of Circle Internet Financial Ltd. According to sources, the organization plans to acquire about 10% of the shares.

BlackRock already has a relationship with Circle because it runs the Circle Reserve Fund. It is in charge of the government money market fund, which holds 90% of the savings that support the USDC stablecoin. The fund had nearly $30 billion in net assets at the end of April 30, 2024. It is likely to be an easy purchase.

JUST IN: BlackRock to buy 10% stake in stablecoin issuer Circle at IPO. pic.twitter.com/rUVZM53WrD

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In addition, according to  Bloomberg, BlackRock could buy the shares through a related company or investment vehicle. However, the final choice has not been made yet. At the same time, neither Circle nor BlackRock has said anything about it.

 The demand for the IPO is higher than the number of available shares 

Circle, the company that controls the USDC stablecoin, has chosen to use the IPO to sell 24 million shares of its Class A common stock. 9.6 million new shares will be issued by the company, and 14.4 million shares will be sold by people who already own shares.

Within 30 days, underwriters can buy an additional 3.6 million shares. This would bring the total number of shares on offer to 27.6 million.

The price of Circle IPO shares is expected to stay between $24 and $26. Circle could make as much as $624 million if all the investors invested the full amount. Circle will get all of the money made from the sale of the 9.6 million shares. 

Other than BlackRock, the SEC report also showed that Cathie Wood’s  Ark Investment Management could also put up to $150 million into this stock offering.  The company plans to set the price of the bond on June 4.

According to reports, the demand for the IPO is higher than the number of shares that are available. 

More realistic market conditions and less frothy expectations for IPOs 

The Circle’s USD Coin is a stablecoin backed by US dollars or assets that are worth dollars, like US Treasury stocks.

The company has had an upward pattern for the most part. After saying it would go public through a SPAC merger in 2021, Circle said its net income for the year was $155.7 million, down from $267.5 million the year before. In 2024, it made $1.68 billion in sales and capital income, up from $1.45 billion the previous year.

J.P. Morgan thinks that the market for stablecoins in the next few years could reach $500 billion to $750 billion. The sign for Circle on the New York Stock Exchange will be “CRCL”. The three main underwriters are J.P. Morgan, Citigroup, and Goldman Sachs.

The stablecoin operator is jumping into the IPO market, which can be very unstable. “Circle now returning to the public markets indicates regained confidence — but at a 25% lower valuation, which reflects more realistic market conditions and less frothy expectations,” said US Tiger Securities analyst Bo Pei.

However, IPOs are doing pretty well lately. For instance, the price that eToro (ETOR) set for its IPO last month was higher than what was expected, and the stock price went through the roof on the first day. 

CoreWeave (CRWV), a cloud computing company backed by Nvidia (NVDA), ended up with a price below its range expectations in March. However, the stock has gone through the roof in the months since then and is on track to set a new record high on Tuesday.

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