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Galaxy Digital Holdings Ltd.
May 29, 2019, 18:17 ET
All figures are in U.S. Dollars unless otherwise noted.
NEW YORK, May 29, 2019 /CNW/ - Galaxy Digital Holdings Ltd. (TSXV: GLXY; Frankfurt: 7LX) ("Galaxy Digital", "GDH Ltd.", or the "Company") today released both Galaxy Digital Holdings LP's ("GDH LP" or the "Partnership") and GDH Ltd.'s financial results for the three months ended March 31, 2019 ("Q1 2019" or "the first quarter"), as well as the Partnership's corporate updates through the date of this press release.
"I am very pleased with our first quarter results and the progress we continue to make in building out and diversifying our business in a smart and disciplined manner. Notably, our digital assets portfolio significantly outperformed broader markets. As we previously announced, after the end of the first quarter, our Principal Investments team successfully monetized a portion of our largest position, generating significant and flexible liquidity for the firm as we go forward," said Michael Novogratz, Founder and CEO of Galaxy Digital. "We are excited about the future prospects for the sector and continue to be singularly focused on bringing greater institutionalization and growth to the digital assets and blockchain technology ecosystem. As the landscape continues to evolve, I am confident that our platform remains well-positioned to identify and invest in new and unique opportunities as they emerge."
As previously disclosed on April 18, 2019 the Partnership accepted a tender offer in the ordinary shares of Block.one. On May 20, 2019, the transaction closed and the Partnership received $71.2 million for the tendered shares, representing a majority of the Company's position and a 123% return on the realized investment.
During the first quarter of 2019, the Principal Investments team closed three new investments and two add-on investments, representing $6.1 million and $1.0 million of invested capital, respectively. These investments included:
Three new equity investments, including (i) Symbiont.io, Inc. ($3.5 million), a financial technology company delivering enterprise blockchain solutions, (ii) Ciphertrace, Inc. ($2.2 million), a company developing cryptocurrency and blockchain tracing and security capabilities, and (iii) Tagomi Holdings, Inc. ($0.4 million), the first live electronic brokerage offering prime services on an agency basis for sophisticated investors of digital assets.
An additional $0.3 million of eligible loans purchased from BlockFi Lending LLC, a wholly owned subsidiary of BlockFi, Inc., a digital asset-secured consumer lending platform in which the Partnership also has an equity investment. Furthermore, the Partnership purchased an additional 5% interest in Galaxy Lending SPV I LLC (the "SPV") from BlockFi, Inc. ($0.1 million). The SPV is a special purpose vehicle created to buy and house digital asset-backed loans from BlockFi Lending LLC that is owned by a subsidiary of the Partnership and BlockFi, Inc. After the purchase of the 5% interest, the Partnership owns 95% of the SPV and BlockFi, Inc. owns 5%.
An add-on investment in the Galaxy EOS VC Fund, LP, a Galaxy Digital Capital Management ("GDCM") managed fund ($0.6 million).
Since the start of 2019, GDCM has been capitalizing on the improvement in the digital assets market, generating inflows into the Galaxy Benchmark Crypto Index Fund (the "GBCIF") and making meaningful progress towards future commitments. The GBCIF is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the "BGCI"), an index co-branded and administered by Bloomberg which is designed to track the performance of the largest, most liquid portion of the digital assets market. In the first quarter, the BGCI returned 7.96%. Year-to-date, the BGCI has returned 99.48%1.
Additionally, in the first quarter of 2019, the Galaxy EOS VC Fund, LP (the "EOS VC Fund"), made investments in Lucid Sight, Inc., Ciphertrace, Inc., and Digital Assets Data Inc. Subsequent to March 31, 2019, the EOS VC Fund made additional investments in Out There Labs, Inc., Azarus, Inc., FinCo Services, Inc., and an add-on investment in AlphaPoint Corporation.
Galaxy Digital Trading ("GDT"), the Partnership's trading business, continued to see counterparty engagement acceleration in the first quarter of 2019. This engagement was led from Asia and the U.S., with Europe progressing forward at a measured pace.
GDT continues to further develop quantitative infrastructure to provide enhanced liquidity and strategy diversification across the global platform.
During the first quarter of 2019, the Advisory Services business added key hires and has made significant progress, with several active mandates for clients across financing, mergers and acquisitions, and other strategic matters.
Data as of market close on May 28th, 2019. Source: Bloomberg.
Select GDH LP Financial Highlights (Q1 2019)
As of March 31, 2019, digital assets, including digital assets posted as collateral, stood at $94.7 million, an increase from $69.8 million as of December 31, 2018. This increase was primarily due to additional purchases during the quarter.
Investments increased from $179.4 million to $202.2 million as of March 31, 2019. The increase was primarily a result of $16.9 million of unrealized gain during the quarter as well as $6.6 million of capital deployed by the Principal Investments team.
Total equity increased by $19.7 million during the quarter to $325.4 million as of March 31, 2019 primarily due to $12.9 million of net comprehensive income and further increased by $10.3 million of equity-based compensation which does not have a net effect on equity due to the accounting treatment for equity-based compensation.
As of March 31, 2019, the Partnership's net book value per unit2 was approximately C$1.51 (US$1.13).
For the three months ended March 31, 2019, net comprehensive income was $12.9 million, as compared to net comprehensive loss of $134.0 million for the three months ended March 31, 2018. The current quarter income was largely a result of realized gain on digital assets and unrealized gain on investments, partially offset by the quarter's operating expenses. The net comprehensive loss for the three months ended March 31, 2018 was primarily a result of unrealized loss on digital assets and investments and realized loss on digital assets.