Sunday 27 June 2021 2:17 pm

AI startup Onfido considers listing in New York instead of London

The British digital identity startup is reportedly considering a stateside IPO over a London listing, due to rapid business growth in North America.

London-headquartered Onfido has begun swapping British accounting standards for American, in preparation for a “potential US IPO in the near future”, The Telegraph first reported.

The AI startup, which helps firms like Microsoft, Volkswagen and Orange to verify customer identities, is currently valued at around £345m.

Onfido announced a $100m funding round in April 2020 that included US investor TPG Growth, bringing the total amount invested in the company to $200m.

Co-founder Husayn Kassai said at the time that the company planned to use the cash mostly to bolster its presence in the US, its largest and fastest growing market.

The company now has 428 staff over nine offices in seven countries, and announced its revenue increased by 93 per cent year-on-year in Q1 2021 – its best sales quarter since it launched nine years ago.

In the same business update in May, Onfido also said its US business had grown by 200 per cent year-on-year in Q1 2021.

A new US bias in the startup’s leadership team began to emerge when its co-founder Husayn Kassai stepped down in November last year and was replaced as CEO by US technology businessman Mike Tuchen.

Most recently, Onfido’s CFO David Clarke stepped down, and the company is reportedly hiring a US-based replacement.

If Onfido lists in New York, it will be joining a string of UK startups that have ventured across the pond for an IPO in more mature capital markets, including cancer biotech Immunocore and online car dealer Cazoo.

While the UK’s IPO market paused in the first half of last year as the pandemic took hold, activity started to re-emerge by the end of the summer before a significant uptick in the last two quarters.

Last week, money transfer firm Wise said it planned to join the London Stock Exchange in what could be the biggest UK listing so far this year, at an estimated value of between £5bn and £10bn, dwarfing Deliveroo’s £7.6bn price tag in March.

London is trying to attract more tech companies to join its market, with new listing rules allowing founders to retain more control over their company whilst still enjoying a profitable listing.

Victorian Plumbing has also revealed plans to join the junior AIM market later in June with a value of around £850m. The listing is expected to raise £285.9m for founder and chief executive Mark Radcliffe.

David Mak, research analyst at Liberum, said: “Investing in an IPO that lists immediately before or during a period of turmoil predicates poor long-term share price performance, whilst investing in one shortly after such a period (like this year and next) provides an attractive set-up.

“We find that IPOs in the first two years after a bear market (a downturn) perform best, and that IPOs in the UK show superior long-term performance to European and US IPOs – matching or exceeding overall market returns.”

Onfido has been asked for comment.

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