Marshall Wace Scores 47% Gain From Circle IPO

Marshall Wace, a prominent hedge fund, has secured a significant profit from its early investment in Circle Internet Group Inc., the issuer of the stablecoin USDC. The fund's XO Digital Finance Fund, with its flagship Eureka hedge fund as the principal investor, achieved an estimated 47% internal rate of return on its investment in Circle. This substantial gain is attributed to Circle's highly successful initial public offering (IPO), which saw the company's shares more than triple from their opening price of $31, eventually closing at $83.23 on the day of the IPO. The IPO was notably oversubscribed and upsized, reflecting strong investor demand.

Circle's IPO not only propelled co-founder Jeremy Allaire to billionaire status but also significantly boosted the performance of Marshall Wace's Eureka fund. The fund recorded a 2.05% gain for the year and a 2.9% gain for the month through June 6, largely due to the success of Circle's IPO. The company's shares continued to perform well, closing at $151.06 on Monday, giving it a market capitalization of over $33 billion.

Marshall Wace's investment in Circle began in 2022 when the fund participated in a $400 million funding round for the crypto firm. The fund retains a long position in Circle following the IPO, indicating confidence in the company's future prospects. This strategic move has positioned Marshall Wace as one of the beneficiaries of the burgeoning stablecoin market, which has seen increased adoption and regulatory scrutiny in recent years.

In addition to its successful investment in Circle, Marshall Wace has made strategic adjustments to its portfolio. The fund has closed down its global industrials strategy and redeployed the capital, reflecting a shift in investment focus. Portfolio manager Steve Binetter, who oversaw the global industrials strategy, is leaving the group. This move suggests that Marshall Wace is prioritizing areas with higher growth potential, such as the digital finance sector, over traditional industries.

The success of Marshall Wace's investment in Circle highlights the potential for significant returns in the digital finance and stablecoin sectors. As the market for stablecoins continues to evolve, investors are likely to seek out opportunities in this space, driven by the promise of stable value and widespread adoption. Marshall Wace's strategic investments and portfolio adjustments position the fund to capitalize on these trends, potentially leading to further gains in the future.