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PensionBee to offer customers access to planned IPO

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PensionBee, the financial technology start-up, will enable customers to use their pensions to become shareholders under plans to list on the London Stock Exchange.

PensionBee will this month give an “early invitation to customers to register their interest” in its IPO, which is expected later this year. This means that they can link their pension accounts to the IPO process, and buy shares when the offer launches alongside the large institutions that tend to dominate flotations.

PensionBee has brought forward plans to list on the High Growth Segment of the LSE for this year.

About 60 per cent of the company is owned by management and staff, including founder Romina Savova, with US bank State Street the biggest external shareholder. The board is chaired by Mark Wood, former chief executive of UK insurer Prudential.

None of the existing owners expect to sell shares in the IPO. KBW Stifel has been appointed to advise on the process.

PensionBee has signed up more than 119,000 people to its pension consolidation platform since its launch in 2014. The fintech has £1.4bn of assets under management.

In 2020, PensionBee reported a 77 per cent increase in revenue to £6.3m, with growth boosted as more people relied on online channels to manage their money during the pandemic. 

Savova told the Financial Times that the company had almost doubled its users and assets under management every year since launch — and was confident that it could continue to grow at a “high double-digit” given the “large” market still to be addressed in the UK.

PensionBee’s online platform allows customers to track pensions, using their employment history to create a single plan and managed by Legal & General, HSBC, BlackRock or State Street. 

The company is working with PrimaryBid, the retail investor platform backed by the LSE, to allow customers to register their interest in buying shares ahead of its prospective IPO. PensionBee will then connect interested customers’ accounts to PrimaryBid. 

PensionBee said that a “key element” of its IPO was allowing customers to become involved. The early indications would also allow them to gauge levels of investor interest, Savova added.

“Customers can too often be an afterthought during an IPO, but our customers have always been at the heart of what we do,” said Savova. “Providing our customers with an opportunity to share in our growth journey has always been a key motivation in our reasons for listing.”

She added that investors were looking to back tech-focused companies with strong growth prospects. The government is conducting a review of the listings regime that is likely to recommend changes to the rules to attract further start-ups to London. 

Anand Sambasivan, chief executive at PrimaryBid, said that “when issuers include their communities at IPO it builds trust, loyalty and engagement”.



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Rocket Lab/Spire Global: Spacs, the final frontier

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Life sometimes imitates emojis. Social media stock tipsters are fond of littering posts with rocket symbols. Rocket Lab, which is floating at a $4.1bn enterprise value, makes the real thing. It was one of two space-related businesses to join the market via special purpose acquisition companies (Spac) on Monday, as the surge in these listings continued.

Just two months into the new year and Wall Street has raised a staggering $58bn through 188 blank cheque vehicles, according to Refinitiv. With hot money appearing to outweigh the supply of merger candidates, sponsors are howling to the moon for deals.

Rocket Lab launches smaller satellites into space. Its celestial twin was Spire Global, a satellite data group that is combining with a Spac at a $1.6bn equity valuation.

Like many recent Spac companies, Rocket Lab and Spire are justifying their valuations with lofty sales and earnings growth projections. Rocket Lab, which generated $35m in revenues last year, said it expected to pull in more than $1.1bn in 2026 and become cash flow positive in 2024. Spire, with just $28m in sales in 2020, is forecasting $900m in revenue by 2025 and positive cash flow in three years’ time.

Tesla founder Elon Musk and his SpaceX rocket company have reignited investor interest in US space companies. Annual revenues from space-related business — at present worth $350bn — could almost triple in size by 2040, according to Morgan Stanley.

SpaceX was reportedly valued at $74bn by its latest private funding. Shares in Virgin Galactic, Richard Branson’s space tourism company, have almost doubled since last September to give it a $9bn valuation, even as the group reported a $273m loss in 2020.

Space companies are a moonshot borne aloft by the rocket fuel of cheap money. That momentum trade has more to recommend than some others, such as fledgling electric vehicle companies. Both Rocket Lab and Spire have proven technologies to accomplish highly demanding tasks. This really is rocket science. But like space exploration itself, these investments are only for the brave.

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Coinbase’s offering docs have just dropped [Update]

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Just when you thought you’d seen it all in SEC filings, along comes the Coinbase prospectus. Which is really a direct listing. But who can tell during these days of ICOs and ITOs what a public offering even is.

The cryptocurrency platform which aims to “create an open financial system” is planning to go public via a Direct Listing on the Nasdaq in the near future. The docs dropped an hour ago.

While we dig through the paperwork, we thought we’d just share this gem from the “Definitions” page — the section of an IPO prospectus dedicated to those terms erstwhile investors might not have heard of.

Won’t you look at that:

Hodl: A term used in the crypto community for holding a crypto asset through ups and downs, rather than selling it.

There’s also an excellent use case (with our emphasis):

Borrow & Lend. We allow our U.S. retail users to borrow against and lend their crypto asset portfolios. Our first product is a portfolio-backed loan: a flexible, non-purpose 12-month term loan that allows retail users to borrow U.S. dollars using their crypto assets as collateral. Secured by their investment portfolio, customers can use the line of credit to access U.S. dollars while maintaining a “hodl” investing strategy. Over time, we plan to offer our retail users the ability to opt into lending their crypto assets to earn a passive return on their long term investments.

This is otherwise known in the real financial world as . . . a basis trade.

Meanwhile, Izzy has been pointing out some other curiosities on Twitter:

We’d also add this, which Preston Byrne on Twitter pointed out:

Satoshi as a risk factor, who’d have thought?

More tomorrow, we’ve not even got to the financials yet.





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Coinbase files to become first listed major US cryptocurrency exchange

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Coinbase, the largest US-based cryptocurrency exchange, revealed the scale of its business for the first time in paperwork for a long-awaited public listing that comes during a booming market for bitcoin and other digital coins.

Coinbase generated $1.3bn in revenue last year, up from $534m the year prior, enabling the company to turn a profit of $322m in 2020 after losing $30m in 2019, according to a filing with US securities regulators.

The company’s public debut, the first for a large US cryptocurrency exchange, is likely to rank as one of this year’s largest new tech listings and would mark a milestone for backers of the emerging sector. Coinbase is aiming to list in late March, said one person familiar with the company’s thinking.

Public investors have recently bought up shares in new market entrants such as Airbnb and DoorDash, fuelling a surge in public listings that has drawn comparisons to the 2000 dotcom bubble.

Coinbase filed for a direct listing rather than a traditional initial public offering, meaning it will not raise additional capital when it goes public.

Brian Armstrong, chief executive of Coinbase, warned that prospective investors should expect volatility in the company’s financials.

“We may earn a profit when revenues are high, and we may lose money when revenues are low, but our goal is to roughly operate the company at break even, smoothed out over time, for the time being,” Armstrong wrote in a letter attached to the filing.

Almost all of Coinbase’s revenue came from transaction fees last year, it said in the filing, underlining the company’s dependence on cryptocurrency trading fees.

Shares in the company have recently changed hands in private markets at prices that would give it a roughly $100bn valuation, according to people briefed on the trades, up from $8bn less than three years ago.

Coinbase could use those trades, in addition to input from public investors and its financial advisers, to determine its opening price on public markets.

Coinbase quickly grew into a favoured destination for cryptocurrency traders after it emerged from the Y Combinator start-up programme in 2012. It has recently touted services designed for large institutional investors and a series of acquisitions expanding its reach into software products for cryptocurrency developers.

The company said institutional activity made up almost two-thirds of its total trading volume in the fourth quarter, when transaction revenues jumped more than 70 per cent from the previous quarter to $476m. It said it had 2.8m monthly transacting users in 2020, almost tripling from the year prior.

Coinbase said it oversaw about $90bn in total assets stored on the platform, representing more than 11 per cent of the total market for cryptocurrencies at the end of last year. It has also made venture capital investments in more than 100 companies.

As trading volumes exploded this and last year, the cryptocurrency market has attracted increasing scrutiny from lawmakers and regulators, including over concerns about digital coins being used for money laundering.

In its filing, Coinbase noted the “extensive and highly evolving regulatory landscape” was a risk factor, and that its obligations to comply with various regulations would only increase as the exchange continued to expand internationally.

Among the company’s biggest investors, controlling more than 5 per cent of stock each, are Andreessen Horowitz, Paradigm, Ribbit Capital, Tiger Global Management, and Union Square Ventures.

Goldman Sachs, JPMorgan, Allen & Co and Citigroup are advising Coinbase on the direct listing.



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