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Danish fintech firm Pleo has appointed a new chief financial officer, the company told CNBC exclusively, beefing up its executive team — a sign the company is readying itself for an eventual initial public offering.
The company hired Soren Westh Lonning, a financial services executive with more than 20 years at companies such as Danish bioscience firm Chr Hansen, hearing aid company WS Audiology, and Danish Endurance, a sports and outdoor clothing startup.
Most notably, Lonning had experience as CFO at Danish food enzyme maker Chr Hansen. Chr Hansen, which is listed on the Danish stock exchange, is one of Denmark’s most valuable publicly listed firms, with a market cap of more than $10 billion.
The European Union recently approved a $22 billion merger between Chr Hansen and competitor Novozymes.
Lonning told CNBC his biggest priorities for the firm when taking over as CFO will be pushing the company toward profitability and maturity; assessing how to continue growing the business despite the difficult macroeconomic environment; and pushing for the sound use of data to make better decisions as a business.
“There’s many companies similar to Pleo who are going through … balancing growth and efficiency or profitability in the environment that we operating in right now,” Lonning said.
“Obviously, we want to continue to to grow and grow fast, but the environment also changed. That’s a dilemma for companies, but even more so for the lifestyle of Pleo and tech companies.”
“So I think I can contribute in that direction, making sure we get as good as possible resource allocation across the company in terms of, you know, finding, finding the pockets where we get most bang for the buck in investing.”
Symbolic move
While Pleo says it is not in a rush to go public, appointing a new CFO is a symbolic move that indicates a company is beefing up its accounting and compliance teams and systems in preparation of an eventual stock market listing.
Jeppe Rindom, Pleo’s CEO, told CNBC the firm is “continuously evaluating various options to fuel expansion that best serve our customers.” An IPO, he said, is an “important consideration,” but “no definitive plans have been set in motion.”
“Part of the responsible decision-making that’s guided us to where we are now is an awareness of how market conditions impact public tech companies and understanding if a decision like this would be in the best interest of Pleo and our stakeholders,” Rindom said.
“Adding Søren to our team is about bolstering our financial strategies and comes at a time of high growth for Pleo driven by market expansion and investments to win mid-market customers,” he added.
However, Rindom added that the stage of maturity Pleo has reached as a business means that it’s “only prudent” to start thinking about the question of an eventual IPO, and suggested the firm wants to be ready for such an event by 2025.
“If you look at the markets today, it’s hard to be optimistic because there’s been IPOs this year and, quite honestly, they haven’t been performing super well,” he said. “So we don’t see ourselves go to market in this context.”
“But we are thoughtful, and we think we need to be ready for eventually, in order to be ready in, let’s say, two years, there are certain things you need to think of already now. And so we’re starting to adapt to that mindset of it.”
Hiring a CFO like Lonning, Rindom said, provides Pleo with enough “optionality” for an IPO, adding that Pleo is upgrading its processes around accounting, risk and compliance in order to “mature in a way that also resonates with an IPO eventually, should that be needed.”
Lucrative path
Pleo has recently made early moves into the world of credit. The company recently launched overdrafts for customers, as part of a larger product revamp earlier this year. The company said it wants to offer more credit products in the future.
Pleo has built a business around a product that financial executives — from CFOs to senior accountants — can use to get visibility over their cash flows and make better decisions about how to manage expenses.
Lending is viewed as more lucrative path for financial firms than payment fees since they can earn interest from cash lent out to customers — especially now when interest rates are higher.
Founded in Copenhagen in 2015, Pleo offers a single platform attached to a company-branded card that lets companies track their spending as well as file and organize their expenses.
The firm, which was last privately valued at $4.7 billion, competes with the likes of SAP’s Concur, as well as startups including U.S. firm Brex, U.K.-based Soldo, and France’s Spendesk.
The firm has raised more than $434 million in funding to date, and is backed by the likes of Coatue, Bain Capital Ventures, Thrive Capital, Creandum, and Seedcamp.