Remittance processor Remitly valued at over $8 billion after strong market debut

A man shows off the Remitly app that he uses to send money to his family in Mexico in this photo taken in San Francisco, California March 30, 2016. REUTERS

(Reuters) -Shares of Remitly Inc opened more than 23% above their initial public offering (IPO) price in their Nasdaq debut on Thursday, giving the remittance processor a market capitalization of roughly $8.5 billion.

The listing comes amid a fertile market for newly issued shares, particularly those of tech companies, which led to recent strong debuts for restaurant software provider Toast Inc and enterprise software firm Freshworks Inc.

The stock opened at $52.9, up from its IPO price of $43 per share.

Remitly is a digital, cross-border remittance provider that promises faster, affordable and more transparent money transfers. The customers are primarily immigrants, according to the company, and its services are used in more than 135 countries.

Founded in 2011, Remitly earns from transactions fees and foreign exchange spreads. It was inspired by co-founder and Chief Executive Officer Matthew Oppenheimer's time in Kenya, where he was able to observe first-hand the difficulties faced by families in sending money overseas.

The cross-border remittance market recorded $540 billion in income flows to low- and middle-income countries in 2020, according to a World Bank report, only $8 billion less than in 2019.

The Seattle, Washington-based company has relationships with various banks and payment providers including Barclays, JPMorgan Chase & Co's retail bank, HSBC, Wells Fargo and Visa Inc.

It priced roughly 12.16 million shares of its common stock on Wednesday to raise nearly $523 million. The IPO was priced above the $38 to $42 range Remitly had announced earlier.

About 5.13 million of those shares were sold by the selling stockholders, proceeds from which would not go to the company.

PayU Fintech Investments, one of Remitly's existing shareholders, has agreed to purchase $25 million worth of the company's shares in a private placement.

Goldman Sachs and J.P. Morgan were the lead underwriters of the offering.

(Reporting by Niket Nishant and Sohini Podder in Bengaluru; Editing by Amy Caren Daniel and Shailesh Kuber)

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