IPO Watch: Wise to list on London Stock Exchange in July

·Contributor
·3 min read
The firm, which was formerly known as TransferWise, plans to do a direct listing on the London Stock Exchange rather than sell shares at a set price in advance. Photo: Pavlo Gonchar/SOPA/LightRocket via Getty Images
The firm, which was formerly known as TransferWise, plans to do a direct listing on the London Stock Exchange rather than sell shares at a set price in advance. Photo: Pavlo Gonchar/SOPA/LightRocket via Getty Images

Fintech company Wise is set to make its market debut in London next month, in what could potentially be one of the biggest floats this year.

The firm, which was formerly known as TransferWise, plans to do a direct listing on the London Stock Exchange (LSEG.L) rather than sell shares at a set price in advance.

This means that the opening price will instead be determined in an open auction on the date of admission to the exchange.

On Thursday, bookrunners said trading was expected to start as early as 7 July after a management roadshow that begins on 1 July, however, this is yet to be confirmed by Wise.

Because the listing will be direct, it is harder to have a sense of a valuation than it would be in the case of a normal initial public offering (IPO). In direct listings, companies sell shares directly to the public without getting help from intermediaries.

This happens when firms can not afford underwriting, do not want share dilution, or are avoiding lockup periods, a less-expensive option than an IPO, according to Investopedia.

The method was pioneered by Spotify (SPOT), which used a direct listing to join the New York Stock Exchange in 2018.

However, Wise was last valued at $5bn (£3.6bn) in a private investment round, and a comparison to rivals suggests it could be valued at between $6bn and $7bn when it joins the market.

Read more: Fintech Wise could be 'major coup' for London Stock Exchange

Known for its cheap money transfers, the payments app has more than 10 million customers, and transfers around £5bn ($7bn) on their behalf every month. The listing marks a win for London, which has lost out on a string of tech listings to New York this year including several UK businesses.

Kristo Käärmann, CEO and co-founder of Wise, said: "This process will broaden the ownership of Wise, in support of our mission to move money around the world faster, cheaper and more conveniently.

"Since announcing our expected intention to float last week, we've had over 60,000 expressions of interest in our customer shareholder programme."

Käärmann co-founded Wise in London in 2010 along with fellow Estonian expat Taavet Hinrikus. The pair were astonished at the cost of sending money back home and set about using technology to make it cheaper.

As well as international money transfers, the company has branched out into new areas like business accounts and cash cards.

Wise disclosed revenues of £421m last year and rapid growth. According to Pitchbook, Wise has 2052 employees and has raised a total of $542m. Its last fundraising round was in May when it secured £160m.

The company became a unicorn, a tech start-up worth at least $1bn, in 2015.

Read more: Wise boss Kristo Kaarmann on 'cool' listing that will turn customers into investors

Perhaps the most controversial part of the listing is a dual class share structure that will hand Käärmann and other senior executives super voting rights for a period of five years. The structure means Käärmann will be able to overrule other investors and continue to steer the direction of the business.

Deliveroo's (ROO.L) decision to adopt dual class shares was one of the reasons given for its disastrous London debut earlier this year. Its share price plunged as much as 30% on its IPO debut.

Semiconductor company Alphawave (AWE.L) also suffered a 18% crash in May on its debut, while earlier this month, online furniture retailer Made.com (MADE.L) sank 8% on its first day of trade.

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