Barry Silbert’s Digital Currency Group (DCG) can be valued at $4.3 billion by applying the price/revenue multiple of comparable companies and the sum-of-parts method. That’s how much the company could be worth on its IPO, according to Messari analyst Jack Purdy.
And finally adding in a (conservative) estimate of their liquid+VC portfolio from numbers released in prior reports
We come up with around $4.3 billion for the combined entity https://t.co/SCKIq6I80P
— Jack Purdy (@jpurd17) November 12, 2020
“An IPO of Digital Currency Group could serve as the Netscape-effect for the industry. One high-profile stock offering could launch a wave of subsequent IPOs. It would feed investor frenzy as they seek access to the forming and rapidly growing sector,” Purdy said.
The expert noted that the group includes the asset manager Grayscale Investments, the prime broker Genesis, the CoinDesk publication, and acquired in September the cryptocurrency exchange Luno. These assets generate annual revenue of $243 million.
$159 million of the $243 million goes to Grayscale. Purdy derived these figures by using assets under management of $7.6 billion.
Using financial information from quarterly reports/other public sources to come up with an estimated revenue of each of their business lines… pic.twitter.com/obgqFGG9mo
— Jack Purdy (@jpurd17) November 12, 2020
To obtain relevant price-to-revenue multiples, the analyst drew on valuations of fintechs Square and Robinhood, as well as peers in the same sectors as the DCG components.
Then looking at two different valuation approaches: viewing DCG as a fintech co or valuing each of the LOBs separately pic.twitter.com/V1pWjFBbjU
— Jack Purdy (@jpurd17) November 12, 2020
Purdy then derived the business valuation by multiplying the revenue figures of the DCG segments by the previously obtained valuation multiples.
To the $2.25–3.52 billion range he added a conservative valuation of the company’s liquid assets (cryptocurrencies) and arrived at the sought-after $4.3 billion.
In the next bull run, all eyes will be on the first major IPO in crypto.
The valuation fetched will be of monumental importance acting as a bellwether for all subsequent offerings.
In the latest — I take a stab at valuing one of crypto’s giants @DCGco pic.twitter.com/6joekpLVQh
— Jack Purdy (@jpurd17) November 12, 2020
The Purdy valuation does not include the acquired mining company Foundry in August. In total, DCG has invested in more than 160 companies worldwide. Investments planned for 2021 are estimated at $100 million.
In September, Genesis announced the launch of a cryptocurrency custody service aimed at qualified investors.
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