Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Trade Republic has become Germany’s most valuable start-up after investors including Peter Thiel’s Founders Fund agreed to back the fintech at a €12.5bn valuation.
Early investors in the Berlin-based group will sell €1.2bn in shares to other backers, including Thiel’s fund and venture capital group Sequoia, the company said on Wednesday.
New investors including Fidelity, Wellington and Singapore’s sovereign wealth fund GIC joined the shareholder base, alongside investment arms of the Arnault and Agnelli families.
The €12.5bn valuation puts Trade Republic ahead of defence technology group Helsing, which raised money in a fundraise led by Spotify founder Daniel Ek’s investment company in June at a €12bn valuation. Trade Republic was valued at about €5bn in its 2022 fund raise.
Often characterised as Europe’s answer to Robinhood because of its low-fee share brokerage business model, the fintech was founded in 2015 and has raised over €1bn from investors over the past decade.
The deal underscores the growing importance of secondary markets for late-stage start-ups, given the difficult market for initial public offerings. After a prolonged downturn in tech listings across Europe, founders, employees and venture capital firms are increasingly turning to secondary sales to cash out of stakes, while new investors use them to build exposure to high-growth private companies.
Trade Republic’s share sale transaction, which also includes existing backers Accel, TCV and Thrive, involved the purchase of shares from early investors like Creandum and Project A, rather than the injection of fresh capital into the company.
The broker’s rapid expansion has been helped by the popularity of exchange traded funds, which it sells to retail investors. “This transaction underlines that the cultural shift to retail investing in Europe is only starting,” said Christian Hecker, co-founder of Trade Republic.
Over the past 18 months, Trade doubled its customer base to more than 10 million people and has been profitable for three years, it said.
The company received a full banking licence in 2023 and has since broadened its product range to include savings accounts, private market investments and a crypto wallet. It operates in several European countries including France, Italy, Spain, the Netherlands and Austria.
The deal comes as policymakers in Germany and elsewhere in Europe increasingly promote private savings and equity investment to address strained public pension systems — a shift that Trade Republic and other investment platforms hope will support their growth.
Trade Republic will be hit when Germany implements an EU ban on “payment for order flow” next year. Until recently, the fintech generated about a third of its revenues from the practice, where market makers pay retail brokers for placing clients’ orders with them.
The remainder of the company’s revenues come from customer trading fees as well as from asset managers paying to sell their products to Trade Republic’s clients.
Additional reporting by Ivan Levingston in London
Credit: Source link
