Wall Street-Backed Blockchain Company Weighs IPO, Sale
By Olga Kharif and Ruth David
Bloomberg
June 12, 2018
-- Developer R3 hasn’t made final decision about future ownership
-- Investors including CEO, BofA will decide company’s course
R3, a blockchain-software company that works with more than 200 heavyweights such as Intel Corp., Microsoft Corp., US Bancorp and Wells Fargo & Co., is considering going public, according to people familiar with the matter.
The company is speaking with advisers about a initial public offering, although no final decisions have been made, said the people, who asked not to be identified because the deliberations are private. It has also been approached by potential buyers, one person said. Founder and Chief Executive Officer David Rutter, along with R3 investors such as Intel and Bank of America Corp., will decide its course.
The path R3 chooses could have implications for a diverse array of companies in finance, insurance and autos. It is working to deploy blockchain applications that could lead to lightning-fast money transfers and loans with new features. Businesses involved with R3 also include ABN Amro Group NV, Barclays Plc, Bain & Co., Bank of New York Mellon Corp. and Deutsche Bank AG.
For now, R3 hasn’t settled on a plan. “We’re not surprised about the speculation given the success of Corda, but an IPO is not a path we’re pursuing at this time,” the company said in a statement. “Our mission from the start was to deliver a blockchain solution for the widest possible business community, and any decision we make will have that goal in mind.”
Big Say
New owners, whether they are public investors or an acquirer, would have a big say over which features and capabilities R3 develops next. Depending on who the buyer is, some R3 users may no longer feel comfortable using its software. Goldman Sachs Group Inc. and Banco Santander left the group in late 2016. The company said more than 20 additional banks have begun working with R3 since then.
R3, with offices in New York, London, Singapore and Brazil, is considering its options as the blockchain software market revs up. A Deloitte survey of 1,000 global executives earlier this year found that about 34 percent of companies already have blockchain systems in production, while another 41 percent expect to deploy the technology in the next 12 months.
Because blockchain technology can offer advantages such as faster transaction times, companies that fall behind in deploying it could suffer financially.
An open-source version of R3’s Corda software is already available. More recently the company began offering a commercial version with 24/7 customer support and additional features. R3 doesn’t comment on profitability, but is already seeing “significant revenue,” officials said. R3 has about 180 employees.
Other banks, such as JPMorgan Chase & Co., have been working on developing blockchain independently, although earlier this year Reuters reported JPMorgan is considering spinning off the project into an standalone company to increase its appeal.
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