TransferWise, the London-based international money transfer service, announces that private investors are now valued at $ 5 billion, confirming an earlier Sky News report. The new valuation represents a 43% increase since May 2019 and was triggered by further secondary share sales of $ 319 million.
At the top of the “secondary” round of shares, in which existing shareholders, including employees, are allowed to sell part of their holdings to other new and existing investors and therefore no money has been included in TransferWise’s balance sheet, is the new investor D1 Capital Partners and existing shareholder Lone Pine Capital.
Vulcan Capital also came on board as a new investor, with Baillie Gifford, Fidelity Investments and LocalGlobe building on their existing holdings.
Each instance also appears to represent opposing ways to value and grow a fintech company, with each scale-up bringing equity-financed growth and profitability into different balance.
Both Klarna and Revolut achieved their most recent rating on a major new primary loan – $ 460 million and $ 500 million, respectively. TransferWise achieved this recent surge only in the secondary private markets, and continued to do so in May 2019 after a $ 292 million secondary round in which investors valued the company at $ 3.5 billion. This was more than double the rating TransferWise had in late 2017 at the time of its $ 280 million Series E round.
In addition, TransferWise, founded in 2010, has been profitable for some time in 2017, and Klarna, founded in 2005, has been fairly profitable from day one, but posted its first loss last year when it invested in global expansion. The much younger Revolut is still loss-making and primarily prioritizes growth – but should aim for profitability by the end of this year.
TransferWise now serves 8 million customers worldwide and processes monthly cross-border payments of around GBP 4 billion on 2,500 currency routes and 54 currencies. The company also recently announced new regulatory entitlements to offer savings and investment options in the UK through the limitless TransferWise account. The new product is to be launched “in the next 12 months”.
“In the past few years we have been financed exclusively by our customers and have not had to raise any external funds for the company,” says co-founder and current CEO Kristo Käärmann in a statement. “This second round offers new investors the opportunity to get involved and rewards the investors and employees who have made us successful so far.”
Of course, a significant new round of financing – secondary or primary – always raises the hackneyed question of whether or when TransferWise wants to go public. On the one hand, this is a controversial issue, as early and long-term investors are still able to maintain liquidity in the private markets. On the other hand, large late stage secondary investors tend to have an IPO sooner or (maybe) later.
“For us, it is a decision that really depends on what the benefit is? Is it a useful time for the company and has not come yet? ”Kaärmann told me when calling the end of last month and added that this will only happen when It is useful for the company and for its customers.
However, for anyone who has kept pace, you wouldn’t expect the TransferWise CEO to say otherwise.