Reportedly, blockchain company R3 CEV is planning to give bank members a 60 percent equity stake in exchange for the funding. R3’s funding will be raised in phases over the next nine to 12 months. The company has reduced the amount of equity funding it intends to raise from bank members from $200 million to $150 million. If R3 doesn’t manage to reach the $150 million target, it will attract other strategic investors such as a technology companies.
R3 is going to create a new company providing shared services for the owners, who would get a 90 percent stake. R3 would have run this utility for 10 years and retained a stake in it.
Reuters informs that absolute majority of original 42 bank members have expressed an interest in investing. However, Goldman Sachs Group Inc and Banco Santander SA as well as Morgan Stanley and National Australia Bank are those participants that have refused to invest in the deal and are not renewing their memberships.
“Goldman sought more leverage in the deal, which could have included a board seat or some other element of additional control, sources said. When R3’s member financial firms moved to cap the raise at $150 million, Goldman decided to exit the conversation and focus elsewhere,” said a source close to the matter.
The fact that Goldman and Santander have abandoned R3 doesn’t mean the loss of their interest in the blockchain. They invest in some other blockchain startups, including Digital Asset Holdings LLC, which is led by former JPMorgan executive Blythe Masters.
The source, that preferred to stay anonymous as the details are not public, reported that R3 doubts that all existing members will join the round despite the fact that most other banks have agreed to the new terms of the deal.
R3 has started its fundraising as financial institutions all over the world have increased their investments in blockchain. Initially, the technology was developed as the one that underlies bitcoin. However, now there are many debates about its great potential for use in financial sphere so companies strive to adopt it for such tasks as transaction processing.
Numerous startups develop and sell blockchain-based solutions to banks. Competition has intensified over the past few months as companies try to secure investments and deals with large institutions to provide the technology.
The Monetary Authority of Singapore has recently announced the launch of a pilot project involving the country’s stock exchange and eight local and foreign banks. The aim of the project is to use the blockchain for interbank payments. The city state’s central bank has already confirmed that the effort is supported by the R3 blockchain research lab and BCS Information Systems.