UK-based FinTech firm TransferWise raises another $319m as valuation soars to $5 bn

TransferWise, the London headquartered international money transfer service, confirmed its valuation at $5bn by private investors. This was speculated in early July by Sky news and has been affirmed now. 

The new valuation represents an increase of 43% since May 2019 and has been triggered by a further $319 million in secondary share sales. New investor D1 Capital Partners and existing shareholder Lone Pine Capital led the “secondary” share round. This Share round allows existing shareholders to sell a portion of their holdings to other new and existing investors, ensuring that no money enters TransferWise’s balance sheet.

Key players Baillie Gifford, Fidelity Investments and LocalGlobe added to their existing holdings, and Vulcan Capital also came on board as a new investor.

FinTech giants Klarna and Revolut broke the $5bn barrier before TransferWise in August 2019 and February 2020 respectively.

2010-founded TransferWise has been profitable since sometime in 2017, and 2005-founded Klarna has been profitable much from day one but posted its first loss last year as it invested in global expansion. The much younger Revolut continues to be loss-making, prioritizing growth above all else but is reportedly aiming for profitability by the end of this year.

TransferWise, founded just nine years ago, now employs 2,200 people, boasting eight million customers and $5bn in monthly cross-border transaction volumes. It has also issued a total of around one million debit cards. It recently announced new regulator permissions to offer savings and investment options in the U.K. via the TransferWise borderless account, with the new product set to launch “in the next 12 months”.

Revolut has similar services to offer, and has thereby gotten the identity of being ‘a bank’. However, TransferWise has no intention of becoming a bank. 

On the other hand, speculations of TransferWise joining the public IPO are on the rise due to the large amount of secondary investment coming in. However, the company seems stable, since early and long-standing investors continue to be able to get liquidity in the private markets.

“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,” says co-founder and current CEO Kristo Käärmann in a statement. “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”, he concluded.