WeTransfer’s parent company, WeRock N.V., has cancelled its plan to IPO on Amsterdam’s Euronext. Amsterdam-based WeRock, the company best known for its file transfer service, WeTransfer, announced that it will not proceed with the planned listing on Euronext on January 28th, 2022.
The announcement shows the volatility under which tech companies operate especially when they plan to go ahead with an initial public offering (IPO). WeTransfer’s planned IPO was the first prominent tech floatation of this year and its cancellation could cause many other high-flying European startups to either postpone their IPO plans or cancel them altogether. The owner of WeTransfer cited volatile market conditions for its decision to cancel the IPO.
WeTransfer’s initial plan for the IPO
WeRock had first detailed its plan to seek an initial public offering of shares and listing on Amsterdam’s Euronext stock exchange on 12th January. The announcement was a sign of European startups maturing and was keenly watched by investors around the world since WeTransfer is one of the major success stories and acted as a beacon for Amsterdam’s tech ecosystem.
At the time of its announcement, the Amsterdam-based company had also revealed its plan to rename itself to “The Creative Productivity Group NV”. Last week, the owner of the popular file sharing and collaboration tools, published a prospectus where it announced the listing will see the company valued at between €629M and €716M. The prospectus also revealed that the Creative Productivity Group NV had set a price range of €17.5 to €20.5 for the shares being sold during the IPO.
WeRock was offering a mix of existing and new shares during its listing on Euronext. It aimed to raise around €125M in fresh capital from the listing and revealed that existing shareholders plan to sell up to 5.4M shares, which translated to a total offer size of between €285M and €290M and a free float of around 43.5 per cent.
WeTransfer cancels the IPO
In a bizarre turn of events, WeTransfer parent announced its decision to cancel the listing but claimed that there was “substantial investor interest”. Gordon Willoughby, CEO of WeTransfer, says the company will continue “pursuing our strategy and continuing our growth trajectory”.
Even before the cancellation was announced today, WeRock had slightly scaled back its ambitions for the valuation of its listing on Euronext. The listing included both a primary and secondary share offer. With the broader economic environment showing signs of weakness, WeRock N.V.’s decision to not proceed with its intended initial public offering should not come as a surprise.
The IPO market reflects the appetite of investors to hedge a risk and with the broader economy under strain, they tend to be reluctant to commit a large sum of cash to a single company. Reuters reports that global stock markets have had a bumpy start to the year. The EuroStoxx 600 technology index is down 6 per cent since WeRock announced its intention to list itself.
If the first half of 2021 was a major moment for tech listings, the second half has been subdued with deal cancellations and postponements dominating the news. France’s Icade Sante and Switzerland’s Chronext pulled their listing plans in October last year while Peloton rival iFIT also dropped its US IPO plans. The companies that went ahead with their listing have seen their valuation erode overtime.
WeRock reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of €21.3M on revenue of €72M for the first nine months of 2021. It is targeting annual revenue growth above 20 per cent in the medium term. The company has demonstrated a strong track record of profitable growth despite wider economic challenges.
“I would like to thank our users, partners, the WeTransfer team and our shareholders for their continued support. Together, we remain fully committed to being a responsible business, pursuing our strategy and continuing our growth trajectory as we capitalise on the opportunities ahead of us,” adds Willoughby.
The cancellation of WeRock’s IPO could have its ripple effect on the likes of Klarna and Revolut, the two hotly anticipated European fintech IPOs of this year. Major tech backers such as Tiger Global, Y Combinator, Spark Capital, Accel, Atomico are looking for exit and big paycheck from their earliest backing of European startups.