Fintech Giant Wise to Go Public in London Stock Market Listing

Fintech Giant Wise to Go Public in London Stock Market Listing
TradeGM Analysis date_range June 18th, 2021

The fintech giant known as Wise announced on Thursday that it expects to go public on the London stock market. Founded by Kristo Käärmann and Taavet Hinrikus in 2010, Wise, formerly known as TransferWise, is seeking a direct listing.

Britain’s Ambitions

The announcement is a victory for Britain. Post-Brexit, the nation hopes to encourage more tech companies to choose London over New York in terms of where to list for their market debut. A government-commissioned review published in early 2021 by former EU Commissioner Lord Hill suggested improving governance structures to help encourage foreign companies to list in the UK.

The aim is also to prevent British ‘unicorns’ from listing overseas. A unicorn refers to a company worth at least $1 billion, and Wise became one in 2015. There’s been an uptick in US-based SPACs luring businesses into US markets – as was the case with Vertical Aerospace and Cazoo.

Volatility has been an issue recently with London listings of technology companies. Companies like Deliveroo and Alphawave have struggled since going public earlier this year. As a result, investors may decide to take a cautious approach to its initial valuation.

Once the listing happens, it will cement Wise’s status as one of Britain’s most valuable start-ups of the last decade. The payments service has over 10 million customers and transfers approximately £5 billion on their behalf every month in 56 currencies.

The exact timing of the listing depends on final approvals from regulators, but the firm hopes that it could be by the end of this week.

Wise’s Next Steps

“Wise is used to challenging convention, and this listing is no exception,” said CEO and co-founder Kristo Käärmann.

He continued, “We’re ten years into building a new way to move money around the world – faster, cheaper, easier and completely transparent. A direct listing allows us a cheaper and more transparent way to broaden Wise’s ownership, aligned with our mission.”

Reportedly, the company’s flotation is expected to be valued at approximately £9 billion, which is much higher than previous estimates. It is working with Goldman Sachs and Morgan Stanley on its flotation plans.

The firm is also looking to deploy a dual-class share structure that lets founders and early investors retain voting control – this formed part of the controversy around Deliveroo’s initial public offering in spring. If a dual-class share structure is employed, Kristo Käärmann will preserve voting control. Also, it means that early investors such as Sir Richard Branson and investment firm Baillie Gifford will see their holdings converted into the new class of shares.

Shaping the Future

Recently, Wise secured a license from the Financial Conduct Authority to offer investment products. According to the firm, it will let customers’ cash balances earn a more attractive return. However, Wise has no intention of becoming an actual bank, which would mean competing with companies like Revolut, Starling, and Monzo.

Industry insiders are hopeful about Wise’s business plans and how they might help shape the future. Stephen Kelly of Tech Nation said, “The U.K. needs more poster-children and role models to inspire the next generation and it is good to see Wise live its values joining the London listing family.”

To Sum Up

The news of Wise listing on the London stock market has been very well received. There is hope among investors that the payment app’s listing will work out much better than it did for other firms that recently went public in London. The success of this listing will be a great victory for Britain, which is struggling to hold its own against the NYSE post-Brexit.

Reportedly, the two founders own approximately 40% of Wise’s shares between them. If that is the case, a flotation will make them paper billionaires.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.42% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. X