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IPO Watch: Fintech Wise could be 'major coup' for London Stock Exchange

·3-min read
Wise founders Taavet Hinrikus and Kristo Kaarmann. Photo: Wise
Wise founders Taavet Hinrikus and Kristo Kaarmann. Photo: Wise

Fintech Wise could make its stock exchange debut in London as early as this week via a direct listing in a move that could value it at up to £9bn ($6.4bn).

Sky News first reported that the company, known for its "instant, super-cheap money transfers," could soon go public on the London Stock Exchange, citing sources as saying the timing depended on final approvals from regulators. 

"Wise's public market debut will be a landmark moment for the payments app, which now boasts more than 10m customers and transfers £5bn on their behalf every month," the report said.

Wise declined to comment on the listing.

There was no clarity regarding exact timing or valuation, although Sky sources said it would be at least £5bn.

Because the listing would be direct, it is harder to have a sense of the valuation than it would be in the case of a normal IPO.

In direct listings, companies sells shares directly to the public without getting help from intermediaries.

This happens when firms that can't afford underwriting, don't want share dilution, or are avoiding lockup periods often choose the direct listing process, a less-expensive option than an IPO, according to Investopedia.

Nalin Patel, EMEA private capital analyst at PitchBook told Yahoo Finance UK that "the proposed direct listing by Wise could be one of the largest by a Europe-based tech company since Spotify (SPOT) in 2018."

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"Wise is among the most valuable VC-backed companies in Europe and its eventual exit has been hotly anticipated for a number of years. The listing could be a major coup for the London Stock Exchange and could prove rule changes are enticing more tech companies to list on it."

However, he said Wise "is potentially utilising dual-class share structures, which have previously been unpopular with other listings such as Deliveroo (ROO.L).”

The company, which started off as a money transfer service in 2011, changed its name from TransferWise to Wise earlier this year, having since expanded to allowing customers to have multi-currency account and a debit card.

"When Wise recently rebranded from TransferWise it triggered wide-ranging speculation that the brand had big plans up their sleeve," said Elizabeth Rayment, director at Your Mind Media.

"It seems they have decided to drop the money-transfer aspect of the name to show that the firm has much more to offer."

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.

Wise will be the latest company to announce listing in London, which has become home to a number of IPOs this year as the City seeks to attract more businesses following Brexit.

Online furniture retailer confirmed plans to list on the LSE after benefiting from a shift to online shopping during the COVID crisis and a blockbuster IPO is on the cards for British retailer EG Group, which values at around £10bn. 

Firms hoping to cash in on strong trading amid COVID raised £8.7bn from listings since the start of this year alone, compared to $15bn (£10.6bn) in 2020 according a Tech Nation report.

Watch: What are SPACs?

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