Wise Direct Listing: Fintech Firm to Go Public

Wise to List Publicly on the London Stock Exchange

The fintech firm, formerly operating as TransferWise, has declared its intention to become a publicly traded company on the London Stock Exchange. Rather than pursuing a traditional IPO, Wise is planning a direct listing. This event is projected to be the largest direct listing ever seen on the London Stock Exchange.

Understanding Wise's Core Business

For those unfamiliar, Wise specializes in facilitating international money transfers. Traditional banks often impose substantial fees for foreign exchange and transactions when sending funds across borders.

Alternatives like Western Union and MoneyGram do exist, offering certain convenience factors. However, these services generally remain more costly than utilizing Wise for cross-border payments.

How Wise Operates

Users of Wise initially deposit funds into their Wise account via bank transfer or debit card. Subsequently, they can dispatch money in a different currency directly to the recipient’s bank account. The company prioritizes transparency, clearly outlining both fixed and variable fees associated with each transaction.

Growth and Financial Performance

Established in 2011, Wise has experienced significant growth. Revenue increased from $422 million to $586 million in the most recent fiscal year (equivalent to £303 million to £421 million).

The company reported a profit before tax of $57 million (£41 million), and has maintained profitability since 2017.

Customer Base and Transaction Volume

Currently, Wise serves 10 million customers. These customers collectively process approximately $7 billion (£5 billion) in cross-border transactions each month.

The company has recently broadened its revenue streams through the introduction of new products and services.

Expanding Services

Wise now allows customers to hold balances in 56 different currencies within their accounts. Account holders receive account details in 10 currencies, alongside a debit card for convenient spending.

This expanded functionality is particularly beneficial for freelancers receiving payments internationally, or individuals relocating abroad for extended periods.

Wise Business and Partnerships

Beyond individual consumers, Wise offers Wise Business accounts. These accounts function similarly to standard Wise accounts, but include features designed for multiple users and business needs.

Furthermore, Wise provides the infrastructure for cross-border transactions within other platforms, including Monzo and N26.

The Significance of a Direct Listing

The decision to pursue a direct listing is noteworthy. Several U.S. companies, such as Spotify, Coinbase, and Slack, have also opted for this approach.

A direct listing indicates confidence in investor interest, as it doesn't involve the support of banks in introducing the company to potential shareholders.

It also signifies that Wise does not currently require additional capital, as direct listings do not facilitate fundraising.

Dual-Class Share Structure

Like many technology companies, Wise intends to implement a dual-class share structure. This will grant existing shareholders increased voting rights per share for a defined period.

This listing is expected to be a significant event for both the European fintech sector and the broader British technology landscape. Investor reaction to Wise will be closely watched.