General
May 4, 2021
6 minutes read

IPO: Sweden’s Trustly Halts Listing After Regulator Complaint

A top fintech company from Sweden has called off its plans for an IPO on the domestic markets after regulators…

A top fintech company from Sweden has called off its plans for an IPO on the domestic markets after regulators in the country raised concerns about its lack of due diligence on end customers.

That company is Trustly, which provides a way for merchants to take payments directly from their customers’ bank accounts with consent without the use of a card or app.

Details:

Trustly had proposed a $9bn stock market floatation that was set to be one of Europe’s landmark tech listings this year. It was planned to take place this quarter but now has been postponed indefinitely, Trustly said on Monday.

In April, Sweden’s Financial Supervisory Authority warned Trustly that it should perform due diligence on some consumers using its service to pay merchants online. This implied that the regulatory agency had suspicions of some of Trustly’s end-users using its service for questionable stuff.

Also, this March, Trustly noted in its annual report that Sweden’s financial regulator was conducting a supervisory review into its compliance with money laundering and terrorism financing prevention laws.

Normally, Trustly performed due diligence on the merchants using its service but not on its end users. With the warning from Swedish regulators, the company took heed and said it was in discussions with regulators to resolve the matter.

On postponing its planned IPO, Trustly Chairman Johan Tjarnberg said the company needed to resolve the inquiries from Sweden’s financial regulator before pursuing a listing on the markets.

Trustly has gotten a rep in the payments industry for its presence in the higher-risk betting industry. As known, companies facilitating payments for online betting sites are subject to tougher regulations than most and have to take heed to avoid handling payments for illegal operators.

In the betting industry, risk comes not just from merchants but also from the end-users betting online. To that, Sweden’s financial regulator has implored Trustly to conduct checks not just on its merchants but also on its end users.

Tjarnberg, Trustly’s Chairman, said the company would “engage in a constructive dialogue” with regulators.

Highlights:

Despite its struggles with regulators, Trustly is on a tear financially as it just reported record revenues from its payments business. In this year’s first quarter, the company’s overall revenues increased 46% year-over-year to SKr632mn ($75mn) and adjusted EBITDA rose 31% to Skr275mn ($32mn).

Trustly had an outstanding year in the North American market which it’s freshly into as revenues from the region climbed 609% year-over-year. Revenue from the region made up 26% of the company’s total revenues.