HR Startup Deel Targets 2026 IPO
HR Startup Deel Targets 2026 IPO
Can it help revive the market for initial public offerings?
- Deel, a human resources and payroll company, is preparing for an IPO as soon as 2026.
- A recent funding round brought in $300 million and added two major shareholders.
- The IPO could signal the end of a slowdown in new listings on U.S. exchanges.
HR and payment unicorn Deel signals IPO plans
Deel, a human resources and payroll software firm founded in 2019, reached an $800 million annual revenue run rate and recently sold $300 million in secondary shares.
The news comes amid speculation that the company is preparing for an initial public offering (IPO) as soon as 2026.
The move distinguishes Deel from other tech companies that typically offer an IPO a decade after they’re founded, making its timeline exceptionally quick. This underpins the company’s recent performance and rapid growth.
Deel’s recent share offering brought in two new shareholders, announcing that General Catalyst and a sovereign wealth fund were included in the recent offering. The wealth fund is believed to be Mubadala Investment Co., according to CNBC. Mubadala is Abu Dhabi’s sovereign wealth fund. The company’s valuation rose to $12.6 billion from $12 billion, according to unnamed sources.
CEO and co-founder Alex Bouaziz told CNBC that “we are getting ready to go out, potentially next year or a bit later.” The CEO also touted the addition of two new board members, former Illumina CEO Francis deSouza and Todd Ford, the former Coupa chief financial officer.
The startup has about 5,000 employees and operates in several countries. Its growth accelerated during the COVID-19 pandemic, as companies shifted their hiring needs to match a workforce that was operating remotely. Its post-pandemic growth has accelerated, and expectations are high that growth will continue.
However, it hasn’t all been smooth sailing. Earlier this year, a lawsuit was filed in Florida with the plaintiff alleging Deel operated without the required licensing and took part in a money laundering scheme. It was also alleged in the suit that Deel violated U.S. sanctions in facilitating payments to Russia. Deel has denied the claims and filed a motion to dismiss the lawsuit, but proceedings are ongoing.
Deel’s IPO could help to reinvigorate the listings market, which saw a sharp slowdown in 2022 as U.S. interest rates rose. The IPO market has seen a steady recovery since then, but the volume of IPOs remains below levels since 2019. If interest rates continue to fall and equity valuations rise, it could put 2025 on course to continue the recovery. A Deel IPO, given its valuation, would help to propel that growth.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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