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 a public company in a way that’s transparent and fair,” Kristo Kaarmann, CEO and co-founder of Wise, told reporters 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 less expensive than an IPO which helps us keep costs down and ultimately helps us on our mission to lower prices.”
Wise was last privately valued at $5 billion in a secondary share sale last year. As the company is going public in a direct listing, there won’t be a share pricing process, which firms would normally go through with an IPO. A Sky News report said the company is seeking a valuation of up to £9 billion in its listing. Executives at the company said pricing would be determined by the market.
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 nine 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.
Deliveroo, which chose a dual class structure, sank as much as 30% on the first day of trading in March, in one of the worst IPOs in London’s history. However, the food delivery app’s float was overshadowed by other issues, including its treatment of gig workers and questions around profitability.
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.
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 invitations to biannual “mission days.”
“I hope Wise has opened an alternative avenue to the public markets for other U.K. 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.”
Goldman Sachs, Morgan Stanley and Barclays will serve as lead financial advisors for Wise’s listing, with Citi acting as co-advisor.