Circle Upsizes IPO to $896M on Strong Crypto Demand

Circle Internet Financial, a leading fintech company, has announced its intention to increase the size of its initial public offering (IPO), targeting a valuation of $7.2 billion. This decision comes after the company initially planned to raise $600 million by selling 24 million shares at a price range of $24 to $26 per share. The revised IPO plan now involves the sale of 32 million Class A shares at a price range of $27 to $28 per share, which could potentially raise up to $896 million. This adjustment is expected to significantly boost Circle's market capitalization to nearly $6.2 billion.

The upsized IPO reflects a strong investor interest in crypto firms, particularly those involved in the stablecoin market. Stablecoins, which are designed to maintain a constant value, usually pegged to the US dollar, are widely used by crypto traders for transferring funds between different tokens. Circle's USDC, the second-largest stablecoin globally, is expected to benefit from the pending stablecoin bill, which aims to regulate the sector more favorably.

Circle's primary revenue source is its reserve income, derived from interest on the Treasuries backing its USDC coin. In the quarter ending March 31, this income rose by 55.1% to $557.9 million. However, distribution and transaction costs for the period increased by 68.2%, outpacing the revenue growth. This cost increase is attributed to Circle's distribution of USDC primarily through its partnership with Coinbase and other third-party distributors.

The upsized IPO is seen as a calculated bet on the growing momentum in the stablecoin market, despite potential regulatory challenges. The company is poised to go public in New York later this week, marking a significant milestone in its journey to becoming a publicly traded entity. This move underscores Circle's confidence in the future of stablecoins and its strategic position in the global payments landscape.