Wednesday 7 July 2021 1:35 pm

Wise valued at £8bn in London's biggest ever tech float

Wise, one of Britain’s biggest fintech firms, has seen its valuation hit £8bn after listing on the London Exchange this morning, marking a major boost for the capital’s tech scene.

Shares in the payments group, formerly known as Transferwise, began trading at £8 each in its eagerly-awaited stock market float.

It follows an auction process launched earlier this morning to determine the price of the company’s shares.

The positive start to trading means Wise is the capital’s biggest float of the year and London’s largest ever tech listing.

Wise has been profitable since 2017 while sales hit £421m this year. In 2021 the app moved £54.4bn across borders for 6m customers.

It was last valued at between £5bn and £6bn in April.

Russ Shaw, founder of Tech London Advocates, described the stock market debut as “a triumph for British fintech and the wider tech industry”.

A new era

The bumper debut is the first example of a direct listing in London, heralding a new era for tech floats in the capital.

In direct listings companies do not create new shares or raise any fresh capital, avoiding the need to hire investment banks as underwriters.

The method, which was pioneered by Spotify for its US listing in 2018, has proved popular with tech firms looking to avoid costly fees or mispricings.

However, Wise has hired Goldman Sachs, Morgan Stanley and Barclays to advise on its listing.

“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,” said Susannah Streeter at Hargreaves Lansdown.

“The UK has gone out of floatation fashion with just five 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.

“But now more firms might see direct listings as a good alternative to traditional IPOs which are more costly, needing the input of expensive services from investment banks.”

The float will spell a major payday for Wise founders Kristo Kaarmann — a former consultant at PwC and Deloitte — and fellow Estonian Taavet Hinrikus. Both have now become paper billionaires.

Kaarmann and other early investors will be granted additional voting rights under the company’s dual share structure — another popular option for tech listings.

Hiroki Takeuchi, co-founder and chief executive of fintech firm of GoCardless, said: “The Wise direct listing is not only a huge milestone for the company, it’s also a giant vote of confidence for UK fintech.

“Macroeconomic headwinds – from Covid to Brexit – haven’t damaged business and investor sentiment, and we’re still thriving as a major fintech hub.”

Christian Gabriel, chief executive and co-founder of software company Capdesk added: “The Wise IPO will strengthen the business case for employee equity as a performance-driver and promises to be a huge boost for the wider UK and European tech ecosystem.

“Keeping, growing and sharing the wealth of big tech successes here is exactly what’s needed to ensure the region stays globally competitive.”

Listings reform

The successful listing will also come as a much-needed boost for London’s efforts to become a major destination for tech listings.

Several tech firms including Trustpilot and Moonpig have listed on the London Stock Exchange this year. However, the capital suffered a major setback after the disastrous debut of Deliveroo, which had been the most eagerly-awaited float of the year.

The Financial Conduct Authority (FCA) this week kicked off a consultation into a potential relaxation of listing rules to help attract more fintechs and high-growth businesses to London.

The consultation will build on recommendations made by the recent Hill Review of listings and the fintech-focused Kalifa review.