The emergence of technology-driven financial services is making people think beyond conventional banks when it comes to availing loans and transferring funds. In a move aimed at taking its business to the next level, fintech company Remitly Global, Inc. recently revealed plans to raise funds through what could be one of the biggest initial public offerings of the year.
7 Mln Shares
The Seattle –based company will be offering around 7million shares at a price estimated to be in the range of $38 to $42 per share. Once approved by the Securities and Exchange Commission, the shares will start trading on the Nasdaq Global Select Market under the symbol RELY later this year.
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At the mid-point of the price range, the offer is expected to generate around $280 million. The management intends to use proceed from the offering for working capital and other general corporate purposes. The group of book-runners for the offering will be led by Goldman Sachs and JP Morgan.
Focus on Immigrants
Remitly was co-founded by CEO Matt Oppenheimer in 2011 as a platform offering easy and low-cost cross-border remittance services. The mobile-based service, which is considered more convenient than the conventional remittance modes, is popular among immigrants in the US and UK who use it for sending money to families in countries like India, the Philippines, and El Salvador.
The company’s impressive financial performance during the pandemic has brightened hopes of it achieving profitability in the near term. While the top-line grew steadily, marketing expenses as a percentage of revenue dropped. In fiscal 2020, total revenues more than doubled to $257 million. As a result, net loss narrowed to $32.6 million or $1.52 per share from $63.5 million or $2.98 per share in fiscal 2019, despite a 62% increase in operating expenses.
Road Ahead
Currently, the company serves more than five million customers in 135 countries, but that represents just 1% of the total remittance market. So, the management’s growth plan is focused on continued investments in technology and new products that would eliminate the key pain points and ensure an improved customer experience.
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Globally, the remittance market is estimated to grow at a combined annual rate of 4% and reach $930 billion by 2026. Considering the steady increase in the number of people moving to foreign countries, the demand for money transfer services is expected to remain high. the company keeps its prices competitive by simplifying the process with the help of advanced technology.
Competition
However, the ongoing shift from conventional foreign exchange channels to cryptocurrency networks might set a new trend for remittance services going forward, thereby intensifying competition. Remitly’s main competitors include Transfast that was acquired by Mastercard, Inc. (NYSE: MA) a few years ago.