Wise to go public in direct London listing
We’ll send you a myFT Daily Digest email rounding up the latest Fintech news every morning.
Wise, the fintech company previously known as TransferWise, has announced its intention to go public in London through a landmark direct listing.
Kristo Kaarmann, co-founder and chief executive, said a direct listing “allows us a cheaper and more transparent way to broaden Wise’s ownership” than a traditional stock market launch.
It does not involve raising any new capital or bringing in new investors, but means shares held by Wise’s existing shareholders will become tradable on the London Stock Exchange.
The company’s decision to list in London rather than New York will be seen as a boost for the UK government, which has been trying to make the country more attractive for fast-growing tech businesses.
Its efforts suffered a setback this year when the high-profile initial public offering of Deliveroo was described as the “worst IPO in London’s history” after the stock fell 26 per cent on its opening day.
Like Deliveroo, Wise said it would use a dual-class share structure. However, while Deliveroo’s set-up gave co-founder Will Shu 57 per cent of voting rights, Wise said it would offer enhanced voting rights to all existing shareholders, including earlier institutional backers such as Baillie Gifford and Fidelity.
Kaarmann said the dual-class structure, which expires after five years, would allow the company to “keep focusing on the mission we’ve always been working on, focusing on customers the way we have and transition smoothly into broader public ownership.”
Matt Briers, Wise’s chief financial officer, added that “we are incredibly mindful of the views of shareholders” and “if it’s not for everybody we understand”, but stressed that such structures were common among successful tech companies in other countries.
Wise, which was valued at $5bn in a secondary share sale last year, did not provide any guidance on pricing, which will be determined through an extended opening auction when it joins the market in a few weeks.
“Part of the reason to do a direct listing is to avoid this speculation and let the market set the price on the first day,” Briers said.
TransferWise opened in 2011 offering cheap cross-border consumer money transfers. Kaarmann and co-founder Taavet Hinrikus developed the business as a way to reduce the amount of money they were spending sending money between London and their native Estonia. They are now the Baltic country’s two wealthiest men, according to local business newspaper Aripaev.
The company renamed itself Wise in February in an effort to highlight a shift towards a broader product offering. Wise has been seeking to attract more profitable business customers and introducing more complex banking services such as multicurrency current accounts.
Wise’s core money transfer business targets wealthier customers than other specialists such as Western Union, and the company says its main rivals are mainstream banks.
It reported revenues of £421m in the 12 months to March, up from £303m the previous year. Pre-tax profit doubled to £41m.
Direct listings have become increasingly popular among technology companies in the US. Spotify started the trend when it joined the New York Stock Exchange in 2018, and has since been followed by groups such as Slack, Coinbase and Roblox.
Wise would be the first technology company to complete a direct listing in the UK. Although the LSE has long allowed companies to be “introduced” without raising capital, introductions have usually been reserved for demergers or secondary listings. Wise would be the largest company to be introduced without already being listed elsewhere or separated from another group in more than two decades.
Stephen Kelly, chair of government-backed entrepreneur network Tech Nation, said: “I hope Wise has opened an alternative avenue to the public markets for other UK technology businesses.”
Briers said the company considered alternative locations such as New York and Amsterdam, but was attracted to London because it had existing infrastructure to facilitate a direct listing and offered access to a global investor base.
He said recent government initiatives to encourage tech listings “helps with our conviction, but we’ve had this plan for quite some time”.
Get alerts on Fintech when a new story is published