Ripple selling 33% of its MoneyGram stake

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Ripple will sell up to 4 million shares of MoneyGram ($MGI) by March 31, 2020. Ripple’s intention to sell 33% of its stake in its strategic partner MoneyGram was revealed via an SEC filing on November 27. 

A Ripple spokesperson said that, 

Ripple is a proud partner in MoneyGram’s digital growth transformation. This is purely a judicious financial decision to realize some gains on Ripple’s MGI [MoneyGram International] investment and is in no way a reflection of the current state of our partnership.

Ripple currently owns 6,237,523 shares of $MGI, roughly 8.6% of MoneyGram’s outstanding shares. In June 2019, Ripple bought its MoneyGram shares for $4.10 apiece; today, shares of MoneyGram are trading at $7.02 as of press time, which means that Ripple has a 72% unrealized gain on their $MGI investment to date. 

Ripple’s SEC filing says that Ripple has a stock warrant to purchase 5,957,600 additional shares, which the company could execute to increase their stake in MoneyGram and become the owner of about 17% of MoneyGram’s outstanding shares.

“We will remain a significant shareholder in MoneyGram following the sale – they are clearly a leader in the global payments space in over 200 countries and territories,” said the Ripple spokesperson. “In just over a year, we’ve made incredible progress and look forward to continuing to work alongside MoneyGram to transform cross-border payments.”

Ripple’s odd partnership

Ripple and MoneyGram partnered in June 2019; in the strategic partnership, Ripple (XRP) pays MoneyGram to provide liquidity to its ODL Network. However, public statements from MoneyGram indicate that the international money transfer company is not very interested in Ripple’s XRP; “We [MoneyGram] sell XRP as soon as we receive it,” said a MoneyGram spokesperson. It seems as though the only reason MoneyGram is interested in the partnership is because Ripple pays them millions of dollars each quarter to provide liquidity.

 The strategic partnership is set to expire in July 2023. It will be interesting to see whether the two companies decide to extend the partnership or terminate the relationship come expiration.