The Israeli start-up Rewire, which provides services for migrant workers who wish to send money abroad, is being acquired by the U.S. company Remitly for $80 million, the companies announced on Tuesday.
Rewire had raised $62 million since its founding in 2015, some of it from Viola FinTech, Migdal Capital Markets, OurCrowd, Glilot Capital and Monte Capital. It provides financial services to migrant workers in Israel, Europe and Britain, with their money transfers going mainly to African and East Asian countries. The company has 650,000 customers and 130 employees, most of them located in Tel Aviv.
Remitly, listed on Nasdaq with a valuation of $1.95 billion, also provides financial services to migrants, and the acquisition of Rewire in a deal involving cash and shares is expected to be the largest in its history. According to its announcement, it employs 2,200 people and serves over 5 million customers. The company’s annual sales (the cost of business it conducts, which does not reflect its revenues) are expected to reach $630 million this year.
“Remitly, a leading company in money transfers for migrant workers, approached us a few months ago and we started negotiating,” says CEO Guy Kashtan This is a fast-growing company which was always our preferred choice in cases we decided to have an exit, since such a deal takes us five years forward.” The current state of the market made the decision even easier: “In light of the cuts and layoffs we see in industry, doing another round of fundraising seemed unattractive,” he says.
Rewire was established by Kashtan, Vice President of Research and Development Adi Ben Dayan, CTO Saar Yahalom and Or Benoz, who no longer works for the company. Rewire will operate autonomously within Remitly and market its services to Remitly customers in 170 countries. Its current customers will still be able to access the company’s services, and Rewire plans to recruit dozens of additional employees this year.
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Rewire views itself as a social impact company; in addition to money transfers, it provides a host of other services at almost no cost. These include payment accounts (which are similar to bank accounts), debit cards and, recently, personal injury and emergency insurance.
“We focused on several countries, with an in-depth study of each community and its needs,” says Kashtan. “Every new product is also examined through its value to migrant workers.” The company takes a cut from each transfer, which varies by country: Customers pay 1 percent when sending money from Europe and 2 percent when sending money from Israel.
Remitly’s shares have dropped by 40 percent since the beginning of this year. However, they spiked by 11 percent after quarterly reports came out earlier this month, showing that the number of active clients has grown by 43 percent in comparison to the same quarter in 2021, reaching 2.4 million customers. Its revenues amounted to $157.3 million, a 42 percent surge. Remitly does not expect the deal to impact its revenue or adjusted earnings for the year, the company said.
“Rewire’s product enhances Remitly’s world-class remittance platform to support our shared mission to transform the lives of our customers,” Josh Hug, a co-founder and chief operating officer at Remitly, said in a statement. “Rewire’s product team has focused on solving complementary problems remittance customers have, and we look forward to partnering with them to deepen Remitly’s customer relationships by solving these problems in a high-quality way.”