Robinhood plans $2B convertible notes offering due 2029

Robinhood Markets, Inc. (NASDAQ: HOOD) announced plans to offer $2.0 billion in convertible senior notes due 2029 in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933.

The Menlo Park, California-based company also intends to grant initial purchasers an option to buy up to an additional $200 million in aggregate principal amount of the notes within a 13-day settlement period from the date of first issuance.

The notes will mature on October 1, 2029, unless earlier converted, redeemed, or repurchased. The interest rate, initial conversion rate, and certain other terms will be set at pricing. Robinhood may not redeem the notes before July 1, 2028, except under a cleanup redemption provision.

According to the announcement, Robinhood plans to use approximately $300 million of the net proceeds to repurchase shares of its Class A common stock, though the actual amount repurchased may differ. A portion of the proceeds will fund capped call transactions intended to reduce potential dilution to holders of Class A common stock until at least a 125% premium to the stock's last reported sale price at pricing. The remainder of the proceeds is designated for general corporate purposes, which may include organic growth investments, acquisitions, and capital expenditures.

The notes are senior, unsecured obligations. Upon conversion, Robinhood will pay cash up to the principal amount and may settle any excess through cash, Class A common stock, or a combination of both, at its election.

The notes and any shares potentially issuable upon conversion have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption. The announcement noted no assurance that the offering will be completed on its proposed terms or at all.

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