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Goldman Sachs has sold off 9% of its MoneyGram shares worth $6.5 million. The investment banking giant revealed this is an SEC regulatory filing this week.
Goldman Sachs Group Inc (NYSE: GS) has sold approximately 9% of its shares in Ripple-backed payment and remittance service provider MoneyGram International Inc (NASDAQ: MGI). The sell-off was confirmed by Goldman Sachs (GS) in a regulatory filing with the Securities and Exchange Commission (SEC). The investment banking giant claimed it had sold over 14,000 shares of Series D preferred stock in MoneyGram between August 5 and August 10 and is worth about $6.5 million.
While no major reason was given for the sell-off, Goldman Sachs (GS) still controls a total of 18 million units of common stock worth $65 million. This stake is remarkably more significant than what Ripple Labs hold in MoneyGram when it invested $50 million in the company.
With Goldman Sachs 9% Shares Sell-Off: What Might This Imply?
The move by Goldman Sachs to liquidate about 9% of its shares in MoneyGram (MGI) has opened the door for different speculations. The year 2020 has been a difficult year to get by for most businesses and different actions in some businesses can spike unprecedented reactions in others.
The most plausible reason for the pull-off may be linked to the recent performances of MoneyGram (MGI) which has generally been below per. During the coronavirus laden second quarter, MoneyGram (MGI) reported an increase in the number of its digital transactions which was up by 106% year-over-year but still reported a $4.6 million for the quarter. This trend was similar in the company’s Q1 performance review thus forming a declining pattern.
MoneyGram (MGI) was notably knocked by the coronavirus pandemic and was placed in a position whereby the Western Union Company (NYSE: WU) was rumored to have initiated talks for a probable acquisition. With a poor public outlook, Goldman Sachs (GS) may be acting in a proactive manner to hedge their holdings.
Another plausible motive for GS to sell-off 9% of its shares may also have a bearing in boosting the firm’s liquidity for enhanced operations. Regardless of the reasons though, such a move from Goldman Sachs can cause a little scare on Wall Street especially at a time like this.
MoneyGram Can Find Solace in Its Partnership with Ripple
The working relationship between Ripple Labs and MoneyGram has undoubtedly blossomed in recent times. In its Q2 earnings report, it was revealed that Ripple paid MoneyGram about $15.1 million in development fees from the period spanning April to June.
Ripple and MoneyGram (MGI) entered into a partnership back in June 2019 to leverage XRP in forex settlements as part of MoneyGram’s cross-border payment process. The partnership is duly focused on the Ripple’s xRapid product, a solution for on-demand liquidity, which reduces reliance on pre-funding by enabling money to be sent from one currency and instantly settled in the destination currency.
At a time where MoneyGram has found itself in turbulent waters, first by the possibility of being acquired by a rival firm and now by the loss of a non-negligible sum from Goldman Sachs shares, MGI will be best suited to strengthen its growing bond with Ripple, a firm that is driving on all levels to be the Amazon of the cryptocurrency ecosystem