Wise, the fintech company that helped revolutionise the money-transfer business, went public in London on Wednesday, with shares opening at £8 per share to value the company at £8bn.
Investors are betting that Wise, which last year processed just over 2% of the global retail crossborder payments and 0.2% of the business segment, can keep taking more of this trillion-dollar market. The company has been profitable since 2017.
The milestone flotation builds on a record year for London listings, ushering in a new batch of tech stocks including Deliveroo and The Hut Group.
It’s one of the first major fintech listings in years.
As trading begins, here are our five key takeaways from the Wise listing:
1. A boost for London as a listing destination
Wise’s decision to list in London is a huge win for the stock exchange. While it’s been a big year so far for IPOs in relative terms, several European startups have flocked to the US to float, lured by SPACs and higher valuations, leading to cries of a tech exodus.
Indeed, there were rumours Wise was torn between the UK and the US too.
Wise’s eventual listing in London is a testament to the charm offensive put on by the stock exchange and politicians to woo startups to list in its capital.
Eyes are now on Wise to restore confidence in London as a listing destination, particularly after Deliveroo’s faceplant of an IPO earlier this year.
2. Changing London listing rules
Wise has taken inspiration from US tech companies by offering extra voting rights to existing shareholders, something that has proven controversial in the UK.
But if it’s a success, Wise’s listing could boost the British government’s plans to allow dual-class share ownership on the top tier of the LSE, where they are currently prohibited.
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The proposed change is part of a wider effort to make it easier for companies to go public in London.
3. Direct listings coming to the UK
Wise hasn’t just opted for an unconventional share agreement — it’s also gone for a direct listing (meaning it’s not raising new capital today, it’s just floating existing shares).
It’s an unusual move for a London company. In fact, it’s the first big tech listing of this kind in Europe and could be a big moment for the local capital markets. The last high-profile direct listing of a European tech company was Spotify in New York in 2018.
One of the benefits is direct listings eliminate the need for expensive investment banks as underwriters.
Once again, Wise could be part of a broader movement to spice up listings in this way in the UK.
4. A lot of people made a lot of money out of Wise... but not one investor
Some of Wise’s early investors who’ll be popping the champagne today include Peter Thiel’s fund, Valar Ventures.
Before the listing Valar Ventures owned around a 13% stake in Wise. Not a bad return for the firm’s first-ever European investment, having led the Series A round back in 2013.
Other major investors included Silicon Valley titans Andreessen Horowitz (10%) and IA Ventures (10%).
Wise cofounders are also expected to be billionaires with this listing, with Taavet Hinrikus still owning 13.75% and Kristo Kaarmann owning 20% at the last count.
Some of Wise’s early backers, like Seedcamp and Index Ventures, will see smaller returns, having decided to cash in early. Seedcamp participated in a 2016 secondary share sale and then sold the rest of its LPs’ stake to Draper Esprit as part of a larger exchange.
Meanwhile, Index Ventures cashed out almost completely, selling 99.9% of their stake between 2017 and 2019.
5. More fintech listings to come
Wise is likely to be the first of a new wave European fintechs to list. Others rumoured to be waiting in the wings include Klarna, Checkout.com, WorldRemit, Trustly and Allfunds are all set to list in the not too distant future.
This story was changed after publication to take out some rogue references to the listing as an IPO. It was not an IPO, but a direct listing.