Airwallex Plans for IPO in 2026, Tackles Compliance and Culture Challenges

Airwallex Plans for IPO in 2026, Tackles Compliance and Culture Challenges

by January 16, 2024

Airwallex, an Australian-born global payments firm, is preparing for an initial public offering (IPO) within the next two years, according to its billionaire founder and CEO, Jack Zhang.

The Australian Financial Review reports that the company, valued at US$5.6 billion, anticipates annual recurring revenue of US$350 million in 2023.

In October 2022, Airwallex had closed its Series E2 financing round with an additional US$100 million, bringing its total funds raised to more than US$900 million.

Established in Melbourne, Airwallex has grown rapidly over eight years, offering cross-border money transfers and foreign currency accounts for businesses.

Despite its complex financial structure, including an ultimate holding company based in the Cayman Islands, Zhang said that Airwallex “was expected to have turned a profit last year, once its accounts were finalised, and processed around US$80 billion in transactions in 12 months.”

The company’s impending IPO aims to benefit early investors, including Tencent and Paul Bassatt’s Square Peg, and determine its market value.

Among its major investors, Tencent holds a 12.5% stake, while founder Zhang owns 14.1%. The company has faced scrutiny over its compliance and anti-money laundering controls, with audits in 2020 and 2022 indicating lapses in staff probity checks.

Zhang also acknowledged past compliance issues, notably in September 2021 when an improperly configured screening system mistakenly flagged over 11,000 customers, mostly due to issues with Chinese names, creating a significant workload and a year-long backlog for the compliance team.

Airwallex has also faced challenges with a high-pressure culture and high staff attrition, particularly in its legal, risk, and compliance departments which saw a 14 percent staff exit in just one quarter of 2022.

However, recent hires including Stripe’s risk lead Alex Hollombe and Google’s former legal director David Shanks aim to strengthen these areas.

Zhang defended Airwallex, stating that as a startup in the rapidly evolving fintech sector, encountering such challenges while challenging the status quo is common.