TransferWise hits $5bn valuation

The cross-border payments group has confirmed reports that it is now valued at $5bn after a secondary share sale

TransferWise, the London-based money transfer service, is now valued at $5bn, the company revealed on 28 July 2020, after its shareholders sold $319m worth of shares. This represents a 43 percent increase in the company’s valuation since a similar secondary share sale in May 2019.

The new valuation comes as TransferWise experiences an increase in new sign-ups during the pandemic. Matt Briers, TransferWise chief financial officer, attributed this to a “heightened awareness of digital products” during lockdown.

TransferWise offers cheap cross-border money transfers for individuals. Since it was founded in 2011, it has become one of the world’s best-known fintech start-ups. It now serves 8 million customers worldwide and processes around $5.2bn in cross-border payments per month. The new $5bn valuation makes it one of the most valuable fintechs in Europe, behind companies such as Klarna and Revolut.

However, Klarna and Revolut both reached their valuations through new primary funding. By comparison, TransferWise has hit the $5bn mark through secondary private markets alone.

“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,” said 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.”

In recent years, the company has expanded its offering of banking products. In 2018, the company launched a “borderless” multi-currency account attached to a debit card and, in June of this year, it secured a license from the Financial Conduct Authority to offer investment products, as a way of encouraging customers to store more money on the platform. However, Käärmann has said that the company has “no plans” to become a bank.