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Transferwise’s remarkable rise lifts ‘unicorn’ backing trusts

22 May 2019

British fintech firm Transferwise more than doubles its valuation to $3.5 billion (£2.8 billion) in boost for private equity backers including Scottish Mortgage, Draper Esprit and Merian Chrysalis.

Leading British fintech firm Transferwise has more than doubled its valuation to $3.5 billion (£2.8 billion) in a boost for its private equity backers which included Scottish Mortgage (SMT), Draper Esprit (GROW) and Merian Chrysalis (MERI).

A $292 million share sale by some investors, including former employees, has hiked the valuation of the London-based money transfer service from the $1.6 billion it fetched at its previous funding round in November 2017, according to the Techcrunch website.

Baillie Gifford, manager of Scottish Mortgage, took the opportunity to increase its £93 million stake in the private and rapidly growing payments firm, while fund management giant BlackRock invested for the first time, Transferwise said.

Founded in 2010 by Estonians Kristo Käärmann and Taavet Hinrikus, Transferwise serves 5 million customers and claims to save them £1 billion a year by eschewing the fees and markups of traditional money transfer agencies.

Käärmann, chief executive, said: ‘TransferWise is experiencing phenomenal growth and this investment is testament to that.’

It has now raised a total of $689 million from investors and is one of 36 unlisted companies in Scottish Mortgage, the UK’s biggest equity investment trust that has made a big push into so-called ‘unicorns’ in recent years to capture the growth of technology businesses now occurring outside public stock markets.

Recently published annual results to the end of March, SMT held 0.8% of its £8.1 billion assets in Transferwise having participated in four earlier funding rounds. The stake had more than doubled from a valuation of £41.6 million a year ago and could be set to rise again.

Fund manager Merian Global Investors was one of two lead investors in Transferwise’s $280 million fund raising in 2017. Merian Chrysalis, a private equity investment trust focusing on companies it believes are preparing to float on the stock market, launched last November with a $22 million stake in the company, its biggest investment.

Last month it announced an 8.9p rise in net asset value per share in anticipation of a ‘material increase’ in one of its portfolio companies, which analysts now assume was a reference to Transferwise.

This early success helped it raise £100 million in a share placing in April, almost doubling its size.

Draper Esprit, a technology venture capital firm which gained its stake in Transferwise when it bought two funds from Seedcamp two years ago, said it had seen its holding more than double from £13.1 million to £27.7 million. It has now sold more than half of this but retains a £12 million stake.

Chief executive Simon Cook said: ‘The fact that we have already realised the original sum we invested in the Seedcamp portfolio is an important vindication of our strategy and underlines our sustainable investment model.

‘The transaction indicates a maturing European ecosystem, where opportunities for liquidity via secondary markets are growing,’ he added.

In further good news for the highly-rated £558 million fund, Draper said it had benefited from a dramatic gain in UiPath, the US robotic software provider. It has also more than doubled its valuation to $7 billion in seven months after investors poured $568 million into the company.

Draper bought its holding in UiPath in January in a $20 million purchase of a 5% stake in the Earlybird Digital East Fund. That holding was now worth more than $30 million it said.

It also disclosed a £13.5 million investment in Perkbox to fund the employee experience platform’s international expansion plans.

Investment company news brought to you by Citywire Financial Publishers Limited.


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