THE valuation of TransferWise, a fintech firm focused on foreign-exchange transactions, has risen to US$5 billion following a secondary share sale worth US$319 million. The valuation has risen 43 per cent since the startup raised US$292 million in May 2019. (see amendment note)
The UK-based company, which has its Asia-Pacific base in Singapore, now counts US hedge fund D1 Capital Partners and Microsoft co-founder Paul Allen's Vulcan Capital as new investors.
Existing investor Lone Pine Capital led the round with D1 Capital Partners. Baillie Gifford, funds managed by Fidelity International, and LocalGlobe expanded their existing holdings. The round allowed earlier investors and employees to sell some of their shares in the company.
Kristo Käärmann, chief executive and co-founder of TransferWise, told The Business Times that the company is profitable and has no immediate need to raise funding.
TransferWise serves eight million customers and processes £4 billion (S$7.2 billion) in cross-border payments every month. Its network comprises 2,500 currency routes, with exchanges between 54 currencies. Almost 30 per cent of international transfers are delivered in less than 20 seconds.
TransferWise said that during the Covid-19 pandemic, it has seen an uplift in new customers seeking digital options. Overall transfer volumes have continued to grow.
The company recently secured a licence in the UK to offer savings and investment products via the TransferWise "borderless" account. A new product is set to launch in the next 12 months.
Mr Käärmann said the firm also intends to offer passive investment products in Singapore that tap on funds stored in business accounts used for international banking. Globally, the TransferWise borderless account holds over two billion pounds in current deposits.
TransferWise has also collaborated with Singapore-based fintech startup Aspire to enable the business users of Aspire’s app to do quick, low-cost international money transfers directly from their transaction account.
The partnership is expected to serve over 10,000 small and medium-sized enterprises (SMEs), for which the cost of forex transactions is a top concern. Venkatesh Saha, TransferWise's head of Asia-Pacific and Middle East expansion, told BT that the firm is in discussions with a number of other similar institutions in Asia to implement its solution designed for banks, digital wallets and other financial institutions.
Transferwise's platform allows for international money transfers with no exchange rate markups or hidden fees. As a means of comparison, indicative rates gathered on July 16 by independent comparison website Monito.com showed that the cost of sending S$5,000 to the US for a Singapore business was about four times cheaper on average when using Transferwise. This is compared to bank providers such as HSBC, OCBC, Maybank and UOB.
"Our aspiration and mission is to provide easy, fast and transparent banking solutions to the thousands of businesses that form the backbone of the economy here in Singapore and across the region," said Aspire co-founder, Andrea Baronchelli.
"Leveraging TransferWise's open API (application programming interface) allows us to do this without much additional and expensive build, enabling us to unlock cross-border payments for our thousands of customers quickly and easily."
Amendment note: An earlier version of the article stated that TransferWise raised funding in May 2020, when it was in fact in May 2019.