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An IPO would allow Robinhood to raise fresh capital and access funding.
AFP through Getty Images
Robinhood Markets, the trading application that came under control
GameStop
trading, goes ahead with plans to become public, said four bankers and venture capitalists.
The startup’s IPO plans are on track and an offer is expected in the next few months, probably in the second quarter, three of the people said.
„The [Robinhood] The IPO is in full swing, “said one of the bankers.
Goldman Sachs
(ticker: GS) advises the offer, said one of the people.
An IPO would allow Robinhood to raise fresh capital, while allowing the company, once public, access to funding, people said. Robinhood was pushed to raise $ 3.4 billion in the last week after a shopping frenzy forced the trading platform to increase the money it deposits at the clearing houses that process its transactions.
Directors for Robinhood and Goldman declined to comment.
Founded in 2013, Robinhood offers commission-free trading in stocks, ETFs, options and cryptocurrencies, as well as margin, PitchBook said. The company sends customer orders to market makers such as Citadel Securities, Virtu Americas and G1X execution services. It had 1,281 employees in 2020.
On Monday, Robinhood said it added another $ 2.4 billion to a round led by
Capital Ribbit.
That funding came after the startup raised $ 1 billion from current investors last week.
Menlo Park, Calif., Was under pressure after Robinhood’s limited trading of GameStop (ticker: GME) and other shares. The move has sparked outrage among customers, investors and on Wall Street. Even Rep. Alexandria Ocasio-Cortez (DN.Y.), and other lawmakers, wrote to
Twitter
that Congress should take a deeper look at Robinhood’s actions.
Robinhood tried to explain its actions, claiming that the requirements of the clearing center determined the company to limit the trading of certain shares, according to a blog post on January 29. The company said the deposit requirements mandated by a clearing center have increased 10 times more than the normal number, and Robinhood “had to take steps to limit the purchase of those volatile securities to ensure we could comfortably meet our requirements.” .
Anger at Robinhood’s tactics did not diminish his popularity. The application was downloaded over a million times last week. This led a hedge fund executive to say that the Robinhood IPO will likely be the winner. “If they are growing users and have a plan to solve PFOF problems with Citadel, I think they can make it public with a few more haters on Twitter,” the executive said.
PFOF refers to the payment for order flows. Robinhood transactions are sold to market makers or large companies such as Citadel.
An IPO would provide an outlet for many Robinhood investors. These include D1 Capital Partners, Sequoia Capital, NEA, 9 Yards Capital and Unusual Ventures. Some of Robinhood’s top supporters, such as Index Ventures, Draper Associates and Andreessen Horowitz, participated in the company’s $ 3 million seed round in 2013.
Index Ventures and Draper declined to comment. Ribbit, Sequoia, NEA, 9 Yards and Andreessen did not return any comments.
Write to Luisa Beltran at [email protected]