Trustpilot picks London for IPO as it targets £1bn valuation

Trustpilot has unveiled plans to list in London, handing the UK a significant tech initial public offering ahead of rival exchanges in the US and Europe, as the online reviews site looks to take advantage of booming demand from investors.

The company, founded in 2007 and headquartered in Copenhagen, plans to raise $50m and is hoping for a market value of about £1bn, according to people close to the company.

The deal will follow greetings card maker Moonpig’s £1.2bn valuation in its London IPO last month. Food delivery app Deliveroo is expected to unveil its own multibillion-pound listing in the coming weeks.

Trustpilot benefited from a surge in ecommerce activity during pandemic lockdowns, driving revenues up 25 per cent last year to $102m. Almost 20,000 companies pay monthly fees for the right to display Trustpilot’s “Trustbox” rating, scored out of five, on their homepage and monitor customer feedback through its software-as-a-service platform.

While it remains loss-making, Trustpilot narrowed its pre-tax losses from $22.6m in 2019 to $12.9m last year.

Trustpilot’s planned listing is a win for London as it vies with exchanges in Amsterdam and New York to attract faster-growing tech companies, with several US-based special purpose acquisition companies targeting Europe’s most promising IPO candidates.

Peter Mühlmann, Trustpilot’s founder and chief executive, said the company had examined “a number of locations” for the IPO but picked London, given the size of its UK business, London’s “growing tech scene” and “a lot of liquidity” on the LSE.

He added that an IPO would help the company in its goal of becoming “the symbol of trust in the internet economy” at a time when “the entire economy is moving online”.

UK chancellor Rishi Sunak is expected to launch this week a £375m fund to invest in tech start-ups, while former European commissioner Jonathan Hill will report his findings after a review of UK listings rules to ensure London remains globally competitive.

Trustpilot helps consumers avoid problematic vendors among the millions of retailers selling their wares online, as well as a growing number of offline businesses. The UK is its largest market.

About 121m reviews and ratings had been submitted to Trustpilot on approximately 529,000 websites by the end of last year, with an average of 12,500 new domains added to its database every month throughout 2020.

With heightened regulatory scrutiny of online content and the growing problem of fraudulent reviews across the web, Trustpilot said last month that it detected 2.2m fake postings out of a total of nearly 39m submitted last year, of which 1.5m were removed automatically.

Mühlmann said that improving its technology and procedures was a “continuous and strong investment”.

Existing shareholders, directors and employees will also be able to sell some of their shares in the IPO. Trustpilot’s backers include venture-capital firms Draper Esprit, Index Ventures and Northzone Ventures, as well as private equity group Vitruvian Partners. It has raised $200m privately to date, according to Pitchbook, which tracks tech investments.

Trustpilot anticipates a free float of at least 25 per cent of the company, with shares representing a further 15 per cent available as an overallotment option.

Morgan Stanley and JPMorgan are joint sponsors, co-ordinators and bookrunners.