TransferWise valued at $5bn in secondary share sale

Early investors and employees of TransferWise have sold $319m worth of shares in a deal that values the UK money transfer company at $5bn.

Matt Briers, TransferWise chief financial officer, said the sale showed that “we’ve built a business that is increasingly valuable in the eyes of a broad range of investors,” adding that it had continued to grow and remained profitable during the coronavirus crisis.

The company’s valuation jumped 40 per cent compared with a similar secondary share sale last year, despite a forecast 20 per cent drop in global remittances this year. 

While the pandemic has created complications for more traditional branch-based money transfer providers, Mr Briers said new sign-ups to TransferWise had been higher than expected, thanks to a “heightened awareness of digital products” during lockdowns.

The company declined to comment on whether Transferwise’s co-founders Taavet Hinrikus and Kristo Kaarmann joined the latest share sales. It said the two men “have had a few opportunities to sell, yet they both retain large stakes in the business”.

Mr Kaarmann said: “We’ve been funded exclusively by our customers for the last few years and we didn’t need to raise external funding for the company. This secondary round provides an opportunity for new investors to come in, alongside rewarding the investors and employees who’ve helped us succeed so far.”

TransferWise launched in 2011 to provide cheap cross-border transfers for individuals such as Mr Hinrikus and Mr Kaarmann, who set up the company after complaining about the high cost of transferring money between the UK and their native Estonia.

It has since expanded to offer cross-border bank accounts and has put an increasing focus on business customers, who have been a key driver of its recent growth. Last month it secured a new licence from regulators to begin offering investment products as a way to encourage customers to store more of their money on the platform and use it more regularly.

TransferWise has long been touted as a potential candidate for an IPO, but has repeatedly chosen to let early backers cash in their gains through private sales rather than go down the path of a public offering.

“This is an alternative to an IPO — it’s a lot of work but much easier [than a flotation] and offers exactly the same benefit to our team and investors,” Mr Briers said. “We still think at some point in the future there’s a high likelihood we’ll become a public company but there’s no immediate plans; this gives us more opportunity to focus on the business.”

US hedge fund D1 Capital Partners and existing shareholder Lone Pine Capital led the latest round of share purchases, while other backers including Baillie Gifford and Fidelity also increased their stakes.

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