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While co-founder John Collison continues to brush off questions about a potential IPO, the rumour mill has been set into action.
Reuters reports that Irish-founded online payments giant Stripe has secured a law firm to help prepare for its stock market debut.
Founded by Irish brothers Patrick and John Collison, Stripe raised $600m in March in a deal that valued the company at $95bn. This makes Stripe one of the most valuable US start-ups in the world.
According to Reuters’ anonymous sources, the New York law firm Cleary Gottlieb Steen & Hamilton has been brought in as a legal adviser on a stock market listing for Stripe.
Considered the first step in the process, the next would involve hiring investment banks. These would be the early steps in a long process and so a listing is not likely for 2021.
It has long been anticipated that Stripe might mark its 12th year in business with a 2022 market debut.
Early investors in Stripe include Elon Musk, Peter Thiel and Google’s venture capital arm, and any current shareholders are set for a hefty payday whenever the company goes public.
For now, though, investors are looking to shore up bigger stakes in the company. Last month, The Wall Street Journal reported that the flourishing fintech ran a tender offer for existing shareholders to sell their stakes.
Around $1bn in shares were reportedly sold off with Shopify, Sequoia Capital, Silver Lake and Capital Group all securing or growing stakes in the Irish-led company.
At the same time, some of Stripe’s earliest employees may have sold their shares in the company before their share options expire, which is typically a 10-year window.
Direct listing a possibility
Seeing as Stripe doesn’t need an initial public offering (IPO) to raise funds, it is believed that the $95bn firm is planning to enter the stock market via a direct listing. However, those plans could change as Stripe begins to tease out its options.
Earlier this week, UK-headquartered fintech Wise became the first tech company to take the direct listing route on the London Stock Exchange.
With a direct listing, a company doesn’t issue any new shares, but gives current investors the opportunity to sell their shares at a price determined by the market. While still a rare route to the stock market, some high-profile companies in the US have chosen a direct listing over a more traditional IPO, including Coinbase, Palantir, Roblox , Slack and Spotify.
Stripe’s global takeover
Tipperary’s own John and Patrick Collison have had phenomenal success with their payments company. In 2017, the pair were listed among the world’s youngest billionaires and this year’s valuation has doubled their net worth.
While established in Silicon Valley, Stripe is dual-headquartered in San Francisco and Dublin and has recently set its sights on European expansion.
The company announced 1,000 jobs at its Dublin HQ to support growth in the EMEA market. In April, Stripe made its first move into the Middle East with the opening of a new office in Dubai alongside the launch of its services in the United Arab Emirates.
The company also continues to expand through acquisitions. In recent months, the company has announced plans to acquire Boston tax software outfit TaxJar and California-based fraud detection start-up Bouncer.
A listing could help finance further acquisitions from the fintech giant.
Stripe is also a frequent investor in other fintech start-ups. It recently participated in funding rounds for US start-ups Ramp, a corporate card issuer; and Step, a teen-focused banking and payments app.
Stripe’s services are also going global. Fresh off its $600m funding round, it began rolling out its card issuing services for businesses in Europe in April. This move brough Stripe Issuing to 20 new markets in Europe, including Ireland.
June saw the release of Stripe Identity, an AI-powered tool for verifying a person’s identity in a payment transaction, and Stripe Tax, a tool to calculate and collect VAT and sales taxes.
While still a private company, key details on Stripe’s revenue and profitability have been kept under wraps over more than a decade in business. What we do know is that Stripe processes hundreds of billions of dollars in transactions each year through a massive client list that includes Google parent company Alphabet, Amazon, Uber and Zoom.
An IPO or other stock market debut has been long-anticipated for the company. When asked recently about plans to go public in an interview for Bloomberg Television, company president John Collison said that Stripe still had no plans to IPO.
“We’re having lots of fun building Stripe. Maybe we do, maybe we don’t someday but right now we have no plans,” he said.
