Farfetch backer Vitruvian buys stake in £3bn TransferWise | Business News

An investment firm which has backed leading technology companies including Farfetch and Skyscanner is taking a stake in TransferWise, the fast-growing British payments platform.

Sky News has learnt that Vitruvian Partners is in advanced talks about acquiring a significant minority shareholding in TransferWise as part of a secondary share sale that could conclude as soon as next week.

Sources said on Friday that Vitruvian and two US investment funds were expected to buy stakes valuing the fintech company at about $3.75bn (£2.9bn).

The deal will offer fresh evidence of TransferWise’s status as one of the UK’s most valuable technology businesses, and provide a new stepping stone along the path towards an eventual stock market flotation.

Vitruvian has invested in a string of digital economy companies prior to public listings, including Farfetch, the fashion business that listed in New York last year.

It has also backed Skyscanner and is a shareholder in Darktrace, the British cybersecurity start-up.

Sky News revealed last week that TransferWise was in the process of strengthening its board by appointing Ingo Uytdehaage, the chief financial officer of Dutch-listed Adyen, as a non-executive director.

TransferWise’s secondary share sale is likely to value it at roughly twice the level at which it last sold new shares about 18 months ago.

It comes at a time when many of its US tech peers, including Lyft, WeWork, Uber Technologies and Slack, are becoming public companies.

TransferWise was founded just eight years ago, but is now seeing customers transferring £3bn a month on its platform, saving themselves an estimated £3m in foreign exchange fees each day.

The two Estonian entrepreneurs behind TransferWise set the company up amid frustration about the cost of sending money overseas.

Taavet Hinrikus and Kristo Kaarmann, who in 2017 swapped roles to become chairman and chief executive respectively, are thought to own roughly 40% of TransferWise between them – meaning that on paper they are each likely to be worth in the region of $750m.

They have made little secret of a long-term plan for an initial public offering (IPO).

In a blog post in 2017, Mr Hinrikus wrote: “In a few years it will be time to think seriously about becoming a public company like the strongest and most trusted financial institutions are.

“But when we do that we will explore that through our own lens – how will it help our customers? How will it help us achieve our mission faster?”

TransferWise website
Image:
The TransferWise website

Other shareholders in TransferWise include Sir Richard Branson, and IVP, a Silicon Valley fund which has backed Snapchat parent Snap and Twitter.

In total, TransferWise has previously raised new funding of about $400m (£300m) – a significant sum for a British technology start-up.

It became a “unicorn” – a tech start-up worth at least $1bn – in 2015, and is more richly valued than other British fintech champions such as Acorn Oaknorth, the digital bank, which recently raised hundreds of millions of pounds from SoftBank’s Vision Fund, Revolut and Monzo.

TransferWise has launched a string of products in the last two years, including a borderless account enabling people to move money between dozens of currencies.

The company has successfully tapped into a frenzy of international interest in the global payments industry as new technology drives down costs and improves speed and efficiency for customers.

TransferWise provides exchange rates to users which are more competitive than most traditional competitors by using an element of peer-to-peer funding to cut costs.

Instead of actually converting money, it pairs users wanting to buy a currency with those wanting to sell it, enabling them to save on often-costly fees.

The company’s expansion has seen it launch into overseas markets including China and Sri Lanka, while it recently applied for a payments licence in Brussels to negate the possibility of any disruption caused by a no-deal Brexit.

The company employs 1,400 people globally, including more than 200 in London, and operates from 10 offices.

The secondary share offering is being co-ordinated by Goldman Sachs.

Vitruvian and TransferWise declined to comment on Friday.

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