Telegram is offering US$2 billion in bonds, seeking to raise US$85 million from Israeli investors to help refinance US$1.72 billion in debt due in March.

The 9% interest bonds are being marketed through Phoenix Underwriting and include an option to convert into equity over five years.

Despite the company reported significant 2024 financial metric, investors are wary due to governance and reputation issues.

Telegram’s centralized leadership under founder Pavel Durov and past links to illegal activity, including content shared after the October 7 Hamas attacks, raise concerns.

This is Telegram’s third bond attempt, with the high interest rate reflecting investor unease after Durov’s 2024 arrest, even though no charges were filed.

🔗 Source: Calcalist

🧠 Food for thought

1️⃣ Telegram’s fundraising evolution reflects crypto regulatory challenges

Telegram’s current $2 billion bond offering represents a significant pivot from its earlier cryptocurrency-focused fundraising strategy that faced regulatory hurdles.

In 2018, the company raised $1.7 billion through an Initial Coin Offering (ICO) for its Telegram Open Network blockchain platform, one of the largest cryptocurrency fundraising efforts at the time1.

This crypto fundraising approach ultimately failed when the SEC intervened, forcing Telegram to return $1.2 billion to investors and pay an $18.5 million fine in 2020 after allegations that the offering constituted an unregistered securities sale2.

The shift to traditional bond markets with the current offering demonstrates how regulatory scrutiny has pushed even tech-forward companies toward conventional financial instruments, a pattern seen across the cryptocurrency space as regulatory frameworks have tightened.

The 9% interest rate being offered to Israeli investors, significantly higher than typical corporate bonds, reflects the continuing risk premium investors demand from companies with regulatory complications in their history.

2️⃣ Centralized governance creates distinct risk-reward profile for investors

Telegram’s highly concentrated power structure, with Pavel Durov serving as sole owner, director, and CEO, presents both potential benefits and significant risks that directly impact its valuation and cost of capital.

Research across 1,431 ICOs found that centralized governance tends to be positively associated with market value in platform-based ventures, suggesting some investors may view Telegram’s concentrated leadership as beneficial for decisive action and strategic execution3.

Recent Telegram developments