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Kraken
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OVERVIEW

In 2019 the market size equaled to $192bn. In April 2021, the cryptocurrency market capitalization reached $2tn. The growth rate of the cryptocurrency market is 118% or x10. The coronavirus pandemic and fears of widespread inflation have both increased this effect. Many investors are interested in cryptocurrencies as a hedge against fiat currencies, especially in times of global uncertainty.

Multipliers

(AS OF 25 OCTOBER 2021)

 

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Underlying Investment Highlights

  • Founded by Jesse Powell in 2011, Kraken Digital Asset Exchange is considered one of the top 5 exchanges (according to coinmarketcap). Kraken's client base trades 78 digital assets versus 7 different fiat currencies: EUR, USD, CAD, GBP, JPY, CHF and AUD. The exchange had an 11.15% share in BTC trading volumes over the last 6 months;
  • Kraken’s trading platform is consistently rated the best and most secure digital asset exchange by independent news media;
  • Kraken investors include top-tier investment firms: SBI Investment, Blockchain Capital, Digital Currency Group, Hummingbird Ventures, and Money Partners Group;
  • Kraken is the first crypto company to acquire a banking license in the U.S., giving Kraken access to federal payments infrastructure and setting the stage to create unique products at the intersection of fiat and cryptocurrencies;
  • According to a Bloomberg interview with CEO Jesse Powell from April 2021, Kraken is on track to go public in H2 of 2022.

Financial Indicators & Security

  • The Company is growing very fast, for the first 5 months of 2021, its revenue reached $700m+ (x7 compared to the same period last year);
  • Compared to 2020, in 2021 EBITDA more than tripled and reached $233.4m. EBITDA margin is estimated above 30% for 2020, and above 40% for 2021;
  • Kraken has over 7m clients, institutions and authorities around the world;
  • Kraken negotiates on forthcoming investment round at valuation of $20bn with General Atlantic, Tribe Capital and other venture funds;
  • We consider Coinbase Global Inc., MarketAxess, Cboe Global Markets, Nasdaq Inc, CME Group Inc, Intercontinental Exchange as peer companies with P/S ratio as a target multiple;
  • We expect the projected revenue to exceed $1.6bn per year in 2021-2022. Thereafter, we got the P/S implied share price of $95.71 (implying P/S mean), which corresponds to roughly $20.8bn valuation;
  • RLC was given the opportunity to buy Kraken stock at offered valuation of $13bn ($59.88 per share). This corresponds to P/S (Forward) of x8.1, which is less than industrial average of x12.9. Moreover, as of June 22 2021, Coinbase (COIN) depicted P/S of x20.2, which is more than 2 times higher the Kraken’s one. Under a conservative scenario, the upside will be x2, but if Kraken achieves the same multiples as COIN before its placement (x50), the upside could be x4-x5.

Additional Details

Growth Cryptocurrency Market Growth Cryptocurrency Market

RLC Shares Terms

FIGI: BBG011S21LB1
FUND NAME: RLC 1 IC 5 LTD an incorporated cell of RL CAPITAL ICC 1 LTD
SHARE CLASS NAME: USD Accumulating
BLOOMBERG TICKER: RLI1LUA GU
ISIN: GG00BNLYXM46
PLATFORM FEE: 5%
PERFORMANCE FEE: 20%