TransferWise has become Britain’s most valuable private fintech business, eight years after its founding.
London-based TransferWise said on Wednesday that its investors had sold $292m-worth of shares to new backers. The pricing of the shares values TransferWise at $3.5bn.
The valuation is more than double what the the company was worth when it raised money in November 2017. The price tag also makes TransferWise the UK’s most valuable fintech business, on a par with Greensill and eclipsing fellow “unicorns” Revolut, Monzo, and OakNorth. Furthermore, TransferWise is now one of Britain’s most valuable private tech businesses in any field.
“If you ask me, then I guess we must be at the top, I don’t know and I frankly don’t care,” founder and chairman Taavet Hinrikus told Yahoo Finance UK.
“Obviously I am proud but I’m mostly proud of saving money for customers. This valuation is a point in time.”
TransferWise offers low cost, online international money transfer services. It handles £4bn in transfers each month and estimates that it saves customers £1bn in fees when compared to traditional banks.
“If we talk about numbers, that’s the most exciting for me,” Hinrikus said. “Valuation? Our valuation is an outcome of the money we save our customer.”
“In one way, of course I’m a little bit competitive so seeing bigger numbers is greater, but it doesn’t really matter. I think it’s a little bit too childish to focus on being the most valuable.”
IPO ‘a few years away’
The so-called “secondary” share sale means that early investors in TransferWise had the chance to cash out and realise gains they’d made.
The company has talked publicly about listing on the stock market, which would make these transactions common place, but Hinrikus said an initial public offering is “at least a few years away.”
“Instead of doing what we just did, we could have gone public,” he said. “What we did now means there’s no need for us to think about an IPO for another few years.
”The goal for us is to keep on growing this company and see how far we can go, and things are going really well, so we’re really focused on growing this company as quickly as we can. An IPO would not help us grow the business any faster.”
TransferWise is part of a select club of British “unicorns” — private tech businesses valued at over $1bn. Unicorns going public in the US this year have received a frosty reception, with Uber (UBER) and Lyft (LYFT) both falling below their IPO prices.
UK online lending business Funding Circle (FCH.L) has also struggled after going public on London Stock Exchange in October last year. Shares have fallen more than 40% since listing.
Hinrikus downplayed any link between these IPO performances and TransferWise’s decision to delay going public.
“What happened with Funding Circle or Uber, I think it does not matter one cent,” he said. “I would say what these companies are worth today is irrelevant — it is similarly irrelevant to our valuation today. We need to think about how the market will value Uber or Lyft in one or two years time when they have figured out the profitability story, or lack of it.
“Think about Facebook. Facebook went public and they went through a similar rough period back in the day because they weren’t doing well on mobile. What does that say about the Facebook business model? I would say nothing.”
Lead Edge Capital, Lone Pine Capital, Vitruvian Partners, and funds managed by BlackRock took part in TransferWise’s secondary share sale. Existing investors Andreessen Horowitz and Baillie Gifford also expanded their investment in the company.
“International money transfers represent a multi-trillion dollar market, until now dominated by banks keeping prices artificially high and transfer times slow,” Nimay Mehta, a general partner at Lead Edge Capital said. “TransferWise has changed all that.”
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at@OscarWGrut.