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Wise debuts in rare London direct listing, valuing fintech giant at $11 billion

Wise debuts in rare London direct listing, valuing fintech giant at $11 billion

07 Jul 2021

The Wise logo displayed on a smartphone screen.

Pavlo Gonchar | SOPA Images | LightRocket via Getty Images

LONDON — British fintech giant Wise began trading at £8 a share in its highly anticipated debut Wednesday, valuing the company at £8 billion, or $11 billion.

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.

In an unusual move, Wise has 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.

“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.

Wise’s debut is a big win for the U.K., which is vying to attract more large tech companies to its stock market with reforms to London’s listing rules. At the same time, as the first direct listing of a tech company in London, it’s also a risky gamble.

The company’s decision to list with a dual-class share structure — which gives founders and early investors enhanced voting rights — may also prove controversial. 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.