Wise direct listing values fintech giant at $11 billion in big win for post-Brexit London

LONDON — British fintech giant Wise got off to a solid start in its highly anticipated debut Wednesday, which gave the company a market value of £8 billion ($11 billion).

Shares of Wise, which was formerly known as TransferWise, opened at £8 a share at 11 a.m. London time, climbing as high as £8.31 before later settling at £8.26 by early afternoon trading.

The money transfer firm opted to list in London through a direct listing, a rare method of going public that was pioneered by Spotify in the U.S. back in 2018. Rather than raising money in an IPO, Wise’s private backers are selling their existing shares to the public.

The listing is a victory for London, which is aiming to become a top global tech hub following the U.K.’s withdrawal from the European Union.

Unconventional listing

In an unusual move, Wise also introduced a program called OwnWise that lets users own a stake in the company. Customers participating in the scheme would be entitled to receive bonus shares worth up to a maximum of £100 after 12 months.

The Wise logo displayed on a smartphone screen.

Pavlo Gonchar | SOPA Images | LightRocket via Getty Images

“It feels very consistent with their brand, particularly the direct listing,” Russ Shaw, founder of Tech London Advocates, told CNBC.

“They’re bypassing what can often be a very expensive process to get through an IPO, and going direct to the market, direct to their customers, trying to cut out as many intermediary costs as possible,” he added.

Wise is one of Britain’s biggest and best-known fintech unicorns. Its listing is seen as a validation for the country’s burgeoning fintech sector, which has produced multibillion-dollar firms like Revolut and Checkout.com, and attracted $4.1 billion of investment in 2020.

The company was founded in 2010 by Estonian friends Taavet Hinrikus and Kristo Käärmann. Frustrated with the steep fees they faced sending money between the U.K. and Estonia, the pair worked out a new way to make cross-border transfers at the real exchange rate.

Wise, which makes money through cross-border transaction fees, has been profitable since 2017. In its 2021 fiscal year, the company doubled profits to £30.9 million ($42.7 million) while revenues climbed 39% to £421 million.

A win for London

At $11 billion, Wise’s market cap is more than double the $5 billion private investors had valued the company in 2020. The float has made billionaires out of Wise’s founders. Käärmann’s stake is now worth approximately $2.1 billion, while Hinrikus’ is worth $1.2 billion.

The debut is also good news for early Wise investors like Peter Thiel’s Valar Ventures and Andreessen Horowitz.

Wise’s debut is also a big win for the U.K., which is vying to attract more tech companies to its stock market after Brexit with reforms to London’s listing rules. At the same time, as the first direct listing of a tech company in London, it was also a risky gamble. Nevertheless, it has turned out to be the biggest London tech listing by market cap in history.

“Wise joining the Main Market through its Direct Listing demonstrates that global tech companies can build, scale-up and go public in London,” said Julia Hoggett, CEO of the London Stock Exchange.

“London offers access to deep pools of international capital, alongside high standards of corporate governance and effective regulations.”

However, Wise’s decision to list with a dual-class share structure — which gives founders and early investors enhanced voting rights — may prove controversial for some investors. Food delivery firm Deliveroo plunged as much as 30% on the first day of trading, in part due to governance concerns around its dual-class stock structure.

Wise is a four-time CNBC Disruptor 50 company that most recently ranked No. 23 on the 2019 list.

(With Inputs from cnbc)

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