Israeli fintech company Pagaya Technologies (Nasdaq: PGY), which has grabbed headlines on Wall Street for its skyrocketing rise in value over the past month, has announced that it has signed a framework agreement to sell shares worth up to $300 million to investment bank B. Riley Financial Inc. (Nasdaq: RILY). According to the agreement published, the share price could change and Pagaya can withdraw from the agreement at any time and has no obligation to sell, while also having the option to direct B. Riley to buy shares over the next 24 months.
B. Riley, a small investment bank based in Los Angeles, will have the right to sell on Pagaya Class A Ordinary Shares. Pagaya's shares have become an enigma due to their inexplicable 680% rise over the past month, after falling heavily in their first few weeks of trading. The sharp rise is perhaps because only few shares are available on the market, while the shares belonging to the founders and institutional investors, who took the company public through a SPAC merger in June at a company valuation of $8.5 billion, are still blocked.
Pagaya's share price fell 6.09% on Nasdaq yesterday to $20.65, giving the company a market cap of $13.5 billion, a multiple of 30 on its revenue. B. Riley's share price fell 2.05%.
According to Pagaya's notification to the US Securities and Exchange Commission (SEC), it is interested in selling up to 40 million Class A Ordinary Shares to B. Riley, although the transaction price - $300 million dollars - would seem to contain an upper limit of 15 million shares, at an average share price of $20. The share price at the time of the transaction will be determined on the same day, and will be 97% of its price. For example, if the price of Pagaya's stock today is $18.70, B. Riley has the right to purchase it for $18.1. Since the announcement of the deal, Pagaya's share has fallen by 15.4%.
Published by Globes, Israel business news - en.globes.co.il - on August 18, 2022.
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