Net comprehensive income1 grew to $860 million
Assets Under Management ("AUM")2 increased 58%
Counterparty loan originations grew over 510%
Erin Brown joins Executive Team as Chief Operating Officer
Galaxy Digital has agreed to acquire BitGo
NEW YORK, May 17, 2021 /CNW/ - Galaxy Digital Holdings Ltd. (TSX: GLXY) ("Galaxy Digital" the "Company" or "GDH Ltd.") today released financial results for the three months ended March 31, 2021 for both itself and Galaxy Digital Holdings LP (the "Partnership" or "GDH LP").
"Galaxy Digital reported another consecutive record quarter, as net comprehensive income grew to $860 million from $336 million in the prior quarter, AUM increased 58% in the quarter, and counterparty loan originations increased over 510%," said Michael Novogratz, Founder and CEO of Galaxy Digital.
"Beyond delivering dramatic organic growth, we announced we will acquire BitGo, which will establish Galaxy Digital as the first full-service digital asset financial platform for institutions and ensure our business is aligned with broader institutional adoption."
Select Financial Highlights for the First Quarter 2021, compared to First Quarter 2020
- Net comprehensive income1 increased to $860.2 million, from a net comprehensive loss of $26.9 million in the prior year period.
- The increase was primarily a result of realized and unrealized gains on digital assets and on investments, coupled with strong contribution from our trading business, partially offset by higher operating expenses.
- Income from our trading business increased to $508.7 million, from a loss of $31.5 million in the first quarter of last year.
- Net realized gains from investments were $151.1 million in the quarter.
- Fair Value of Net Asset Holdings3 increased 128% to $1.85 billion, from $813.5 million at the end of the prior year.
- The increase was primarily a result of gains on digital assets and on investments.
- As of March 31, 2021, the Partnership had a material net holding in Bitcoin of approximately $761.8 million, excluding non-controlling interests. The increase in the value of holdings was primarily driven by the increase in price.
- Investments stood at $351.6 million as of March 31, 2021, an increase of $91.2 million from December 31, 2020. The change was primarily due to the increase in unrealized gains and $40.9 million of new capital deployed by the Principal Investments team during the year, which were partially offset by the sale of some investments.
| _______________________________ |
| 1 | Excluding non-controlling interests ("NCI"). |
| 2 | AUM is an internal estimate inclusive of a sub-advised fund, committed capital in a closed-end vehicle, and seed investments by affiliates.
Changes in AUM are generally the result of performance, contributions, and withdrawals. |
| 3 | This supplementary financial measure is defined as Digital assets plus Investments, less Digital assets sold short, less Investments sold short, less Non-controlling interests. |
Operating Highlights for the First Quarter 2021, compared to First Quarter 2020
- Galaxy Digital Trading ("GDT") reported records in: counterparty trading volumes, the size of its counterparty loan book, and in gross counterparty loan book originations.
- Counterparty trading volumes continued to experience significant growth, increasing 50% from the quarter ended December 31, 2020, and over 290% year over year.
- GDT continued to experience strong growth in the Company's counterparty loan book for the quarter ending March 31, 2021, increasing in excess of 290% to approximately $440 million, and grew gross counterparty loan originations in excess of 510% since December 31, 2020 to approximately $670 million.
- GDT also onboarded over 100 new counterparties in the quarter, and added over 30 approved cryptocurrency tokens to our platform, meaning GDT now makes markets in over 90 cryptocurrencies.
- Galaxy Digital Asset Management ("GDAM") reported preliminary assets under management ("AUM") of $1.27 billion as of March 31, 2021, a 58% increase from the quarter ended December 31, 2020. AUM consisted of $950.0 million in GDAM's Galaxy Fund Management products, and $325.0 million in the Galaxy Interactive fund.
- Recent product launches include: the CI Galaxy Bitcoin ETF (Ticker: BTCX), and the Galaxy Ethereum Funds, which track the newly launched Bloomberg Galaxy Ethereum Index (Ticker: ETH), the third in the Bloomberg-Galaxy family of indices.
- In March 2021, Morgan Stanley began offering its wealth management clients access to bitcoin funds, including the Galaxy Bitcoin Fund LP, and the Galaxy Institutional Bitcoin Fund LP.
- Galaxy Bitcoin Fund, LP, Galaxy Institutional Bitcoin Fund, LP, and Galaxy Institutional Bitcoin Fund, Ltd. (collectively the "Bitcoin Funds") track the Bloomberg CFIX pricing of bitcoin ("XBT"), and the XBT has returned 101.92% on a year-to-date basis through March 31, 2021.
- Galaxy Benchmark Crypto Index Fund LP (the "Index Fund") is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the "BGCI"). The BGCI has returned 118.32% on a year-to-date basis through March 31, 2021.
- Galaxy Digital Investment Banking ("GDIB") continued to make progress for clients across financing, mergers and acquisitions, and other strategic matters, with several active mandates in various stages of execution.
- Key activities as of March 31, 2021 include consulting on a recent cryptocurrency company's fundraising round.
- GDIB also acted as a Strategic Advisor in connection with a public offering in the FinTech space.
- GDIB increased client coverage to 90%+ of its target universe.
- Galaxy Digital Mining ("GDM") established its own proprietary bitcoin mining operation, hosting its machines at a third-party data center in the United States, and has begun proprietary mining.
- GDM closed its first two mining financing deals.
- GDM has built a strong pipeline, speaking with over 70+ companies in the space.
- Based on forward purchase commitments, GDM expects to achieve up to 1,995 Petahash per second (PH/s) of mining capacity delivered monthly through the end of 2022.
- Principal Investments: The Company made 12 new investments and now holds approximately 80 investments across approximately 60 portfolio companies.
- The Company recognized a liquidity event of over $125 million from one of its portfolio companies during the quarter.
Corporate Updates
- The Company has appointed Erin Brown as its Chief Operating Officer, effective immediately. Erin is a seasoned executive with significant experience in treasury, risk and trading operations. She most recently served as Chief Risk Officer at Jump Trading, and previously was the Head of Global Treasury and Operations at DRW.
Pending Acquisition of BitGo
- Galaxy Digital announced on May 5, 2021 that it has agreed to acquire BitGo, the leading independent digital assets infrastructure provider. The acquisition will position Galaxy Digital as a leading global full-service platform for institutions seeking access to the crypto economy, offering an unparalleled breadth of industry-leading products and services at scale.
- Under the terms of the merger agreement, the consideration to BitGo shareholders will consist of 33.8 million of newly issued shares of Galaxy Digital common stock and $265 million in cash, subject to certain adjustments and deferred purchase considerations, implying an aggregate transaction value of approximately $1.2 billion based on Galaxy Digital's closing share price on May 4, 2021.
- Galaxy Digital will use its balance sheet to fund the cash consideration, a significant portion of which will be deferred up to 12 months post-close. Additionally, Galaxy Digital will issue incremental shares of its common stock to BitGo's shareholders in exchange for BitGo's net digital assets at close. The BitGo acquisition diversifies the business with greater contribution from reoccurring revenue that is significantly less correlated with digital asset prices.
- The acquisition accelerates product innovation and development capabilities by adding over 50 engineers and key product and security infrastructure personnel.
- Immediate revenue synergy opportunities, paired with BitGo's strong base business and growth trajectory, support the value of the acquisition.
- The transaction has been approved by the boards of directors of both Galaxy Digital and BitGo. The acquisition is expected to close in the fourth quarter of 2021, subject to approval by Galaxy Digital's shareholders of the domestication of Galaxy Digital as a Delaware corporation and the internal restructuring, as well as certain related matters and other acquisition-related closing conditions and regulatory approvals.