TransferWise, the London-based international money transfer service, announces a new $ 292 million second round in which investors value the company at $ 3.5 billion. This is more than double the valuation that TransferWise made at the end of 2017 at the time of its $ 280 million Series E round.
The new co-financing – without new cash flow into TransferWise's balance sheet as a number of existing shareholders sell all or part of their stake – was led by growth equity investors Lead Edge Capital, Lone Pine Capital and Vitruvian Partners.
Existing investors Andreessen Horowitz and Baillie Gifford expanded their stake in TransferWise, while the investment also came from funds managed by BlackRock.
In a phone call, Co-founder of TransferWise and Chairman Taavet Hinrikus told me that the round was also oversubscribed. The $ 292 million arbitrary number was simply the result of existing shareholders' willingness to cash and by no means on higher interest rates.
He also points out that existing institutional investors in this round are not getting out, with Andreessen Horowitz and Baillie Gifford actually doubling. Instead, this liquidity event was above all an opportunity for TransferWise employees ̵
All this – and at the risk of repeating myself – suggests that a potential public offering of TransferWise is still a long way off that Hinrikus does not refute. "Why should we go public?" He says rhetorically, noting that the company is still growing fast and capital is not an issue.
Why are other fast-growing companies going public much sooner today? "You would have to ask them," says Hinrikus, returning my question in his usual relaxed and objective way. A little harder he expresses that a difference could be that the institutional investors of TransferWise are not (yet) pushing for a liquidity event on the scale of an initial public offering. As mentioned earlier, in some cases they actually buy more shares in the company.
Hinrikus also says that the regulatory climate is now changing in favor of TransferWise. In 2018, the EU agreed to prohibit the prohibition of exchange rate premiums on international payments under the Cross Border Payments Regulation, a long-standing commitment of the London-based fintech company. Australia is considering similar regulatory action following an investigation by the Australian Competition and Consumer Commission.
To this end, TransferWise currently claims to serve 5 million customers worldwide and process £ 4 billion per month. An estimated £ 1 billion in bank charges are saved every year. The service currently supports 1,600 currency routes and is available for 49 currencies.
The company employs more than 1,600 people in 12 global offices and will employ 750 additional employees over the next 12 months. Audited financial results for the fiscal year ended March 2018 showed sales growth of 77 percent to £ 117 million and net income of £ 6.2 million after tax.