The positive start to trading for fintech giant Wise, going public this morning, means the payments firm has become London’s largest ever tech listing.
The firm saw its valuation swell to £8bn, marking a major boost for the capital’s tech scene. It’s a big step up from the £5bn price tag attached to the company by private investors last July.
There were 47m trades in the first half hour, pushing the price up by 3 per cent from the opening auction price of 800p. Shares came out of auction at 820p before dropping slightly and then rebounding to 825p by midday.
‘’Wise may have flown into the stock market blindfolded, given that by choosing a direct listing, its share price was not decided in advance, but the payments firm has had a smooth landing, with shares rising since trading began,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown in London.
Wise has made a feature of bucking tradition and disrupting systems ever since it launched in 2011 as Transfer Wise. It now boasts 10m customers worldwide and has been profitable for the last four years.
“It’s expanded from a personal peer-to-peer service to offer businesses faster payments solutions and that is an attractive feature of its growth prospects,” Streeter said.
But there are plenty of risks ahead: the company has rivals snapping at its heels in the revolutionary world of payments.
“To stay competitive it may be forced to cut fees faster than it can reduce costs. It has also noted that excessive volatility in currency markets could also affect its profits,” Streeter concluded.
London as a fintech hub
The unruffled start to trading should help London’s efforts to maintain its reputation as a fintech hub as it has struggled to attract fast growing companies keen to list.
“The UK has gone out of floatation fashion with just 5 per cent of companies delivering an IPO choosing London as the launch pad. This particularly worrying because we see IPOs as an opportunity to bring more people to investing for the first time,” Streeter said.
However, more firms might now see direct listings as a good alternative to traditional IPOs which are more costly, needing the input of expensive services from investment banks.
“Direct listings are more of a level playing field for all investors. Instead of institutional investors usually being given first dibs, retail investors get an equal bite of the cherry,” she added.
More direct listings would be a welcome development given that retail investors have been excluded from 97 per cent of IPOs since 2017.