Finance News

Smart debuts on the uncommon London direct itemizing, valuing the fintech large at $ 11 billion

The Wise logo is displayed on a smartphone screen.

Pavlo Gonchar | SOPA pictures | LightRocket via Getty Images

LONDON – UK fintech giant Wise started trading at £ 8 a share on its much-anticipated debut Wednesday, valuing the company at £ 8 billion, or $ 11 billion.

The money transfer company opted for a listing in London through a direct listing, a rare method of IPO introduced by Spotify in the U.S. public in 2018.

In an unusual move, Wise also introduced a program called OwnWise that allows users to own an interest in the company. Customers who participate in the program will be eligible for bonus shares worth up to £ 100 after 12 months.

"It feels very consistent with their brand, especially the direct listing," Russ Shaw, founder of Tech London Advocates, told CNBC.

"They bypass the often very expensive process of going public and go straight to the market, straight to their customers, in order to avoid as many interim costs as possible," he added.

Wise is one of the UK's largest and most well-known fintech unicorns. The listing is seen as endorsement of the country's burgeoning fintech sector, which spawned multibillion dollar companies like Revolut and Checkout.com and attracted $ 4.1 billion in investments in 2020.

The company was founded in 2010 by Estonian friends Taavet Hinrikus and Kristo Käärmann. Frustrated with the high fees they had to pay to send money between the UK and Estonia, the pair devised a new way to make cross-border transfers at the real exchange rate.

Wise, which makes money on cross-border transaction fees, has been profitable since 2017. In fiscal 2021, the company doubled profits to £ 30.9 million ($ 42.7 million) while sales climbed 39% to £ 421 million.

Wise's debut is a huge win for the UK as it struggles with reforms to London's listing rules to attract more big tech companies to its stock market. At the same time, being the first direct listing of a technology company in London is also a risky game.

The company's decision to list with a two-class share structure – which gives founders and early investors expanded voting rights – could also prove controversial. Grocery delivery company Deliveroo slumped up to 30% on its first day of trading, in part due to governance concerns about its two-tier stock structure.

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