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British fintech firm Wise plans to go public in London via rare direct listing

British fintech firm Wise plans to go public in London via rare direct listing

17 Jun 2021

In this photo illustration, the TransferWise logo is seen displayed on an Android mobile phone.

Omar Marques | SOPA Images | LightRocket | Getty Images

LONDON — British financial technology firm Wise said Thursday it expects to go public on the London Stock Exchange through a direct listing.

Wise, which was formerly known as TransferWise, said it was seeking a direct listing rather than an initial public offering as it doesn’t need to raise any fresh capital. Direct listings allow companies to go public without involving underwriters or issuing new shares.

The company said its stock market debut will be the first direct listing of a tech company in London.

Founded in 2010, Wise says it has 10 million customers who use its money transfer service to send £5 billion ($7 billion) each month. The company competes with incumbents including Western Union and MoneyGram, as well as upstarts like Revolut and WorldRemit.

News of Wise’s debut marks a big win for Britain, which is hoping to convince more large tech firms to list in London rather than New York. The government is considering proposals to relax London’s listing rules making it easier to issue dual class shares, which give founders and early backers more control.

“We’re taking steps to become public company in a way that’s transparent and fair,” Kristo Kaarmann, CEO and co-founder of Wise, told reports on a conference call on Thursday.

“We chose a direct listing because everyone has the same opportunity to own a part of wise from large institutions to customers it’s les expensive than an IPO which helps us keep costs down and ultimately helps us on our mission to lower prices.”

Wise is opting for a dual class share structure on the standard segment of London’s main market. The firm said it intends to issue two classes of shares, class A and class B. The class B shares would entitle holders to 9 extra votes per share. They are non-tradable, will not be listed and expire on the fifth anniversary of Wise’s listing, the company said.

The structure means that Kaarmann will be entitled to more voting rights than other investors, but no existing shareholder will have more than half of the voting rights purely by virtue of holding class B shares. Investors have raised concerns in the past over governance issues in dual class structures, however Wise says its structure is fair and democratic.

Wise said it would also introduce a customer shareholder program called OwnWise, which would let 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. They will also receive other perks, such as invitation to biannual “mission days.”

“I hope Wise has opened an alternative avenue to the public markets for other UK technology businesses to ensure we have a thriving tech scene for decades to come,” said Stephen Kelly, chair of industry body Tech Nation.

“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.”

Wise, which has been profitable since 2017, said it made a £30.9 million profit on revenues of £421 million in its 2021 fiscal year. Profits more than doubled from £15 million in the previous year, while revenues climbed 39% from £302.6 million.

Goldman Sachs, Morgan Stanley and Barclays will serve as lead financial advisers for Wise’s listing, with Citi acting as co-adviser.