TransferWise: Money transfer fintech hits $5 billion valuation after secondary trade

• London-based startup TransferWise has boosted its valuation to $5 billion after concluding a $319 million secondary share sale.
• New investor D1 Capital Partners and existing shareholder Lone Pine Capital bought into the firm while existing shareholders Baillie Gifford, Fidelity Investments and LocalGlobe expanded their holdings in the fintech. 
• “We’re very happy to not have to raise every two to three years to keep the business alive,” Matt Briers, TransferWise CFO told Business Insider in an interview. “It’s a nice position to be in — we’re not living hand-to-mouth, we’re profitable, not solving for a short term valuation, and the most important thing for us and investors is a sustainable, durable business.”
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London-based money transfer company TransferWise has boosted its valuation to $5 billion after concluding a $319 million secondary share sale.

The new valuation maintains the company’s position as one of Europe’s most valuable fintech startups and the secondary trade serves to diversify its funding pool.

The company allows customers to send and receive funds in multiple currencies all at real-time exchange rates, and recently expanded its US presence. 

New investors D1 Capital Partners and existing shareholder Lone Pine Capital bought into the firm while existing shareholders Baillie Gifford, Fidelity Investments and LocalGlobe expanded their holdings in the fintech. Vulcan Capital also bought in.

Secondary share sales are uncommon in Europe and similar deals, which involve existing shareholders selling off their shares to other buyers, are not generally publicized. The transaction gives liquidity to early backers and employees, several of whom may now be extremely wealthy.

TransferWise has now attracted some $1.92 billion in primary and secondary transactions following a similar deal last year. 

The firm’s chief financial officer, Matt Briers, told Business Insider the move was designed to help the company work with investors who had five to ten year horizons and reward employees. 

“We’re very happy to not have to raise every two to three years to keep the business alive,” Briers said.  “It’s a nice position to be in; we’re not living hand-to-mouth, we’re profitable, not solving for a short term valuation, and the most important thing for us and investors is a sustainable, durable business.”

Investors view the company as ripe for a float, and it now has the freedom to choose when it goes public.

Some companies can feel pressure to list or sell if their backers want liquidity. Cofounder Taavet Hinrikus previously told the Financial Times that he believes TransferWise will go public at some point, but the deal means there’s no rush.

The company now serves 8 million customers worldwide, processing £4 billion in cross-border payments alone every month and claims to be adding 10,000 business customers a month via its integrations with other startups, such as Monzo.

“There’s lots of talk about unicorns, but in reality we’re building something even more rare,” Kristo Käärmann, CEO and cofounder, TransferWise said. “Nine years in, we’re saving our customers £1 billion in hidden fees every year. That’s a start, but only a small dent in what banks collect. We’re still at the beginning of a long journey, and we’ve built a financially sustainable company to get there.”