wise (formerly transferwise) confirms direct listing on the lse in early july, reportedly at a $6b-$7b valuation

Wise Confirms Direct Listing on the London Stock Exchange

Following an initial announcement earlier this month, Wise has formally filed a regulatory document detailing its intention to become a publicly traded company via a direct listing on the London Stock Exchange (LSE). The London-based firm, previously operating as TransferWise, specializes in international money transfers and currently serves 10 million customers.

Share Structure and Listing Details

The company intends to begin trading in “early July 2021,” though specific pricing for its Class A shares remains undefined, consistent with the nature of direct listings. Reports suggest a potential valuation between $6 billion and $7 billion upon listing.

Wise has implemented a dual-class share structure, comprising Class A and Class B shares, to reinforce its commitment to its core mission as it enters the public market. It’s important to note that Class B shares will not be available for trading.

The company stated that it will not establish a price for the Class A shares, nor will it offer them through a traditional offering. Instead, the opening price will be determined through an auction process on the day of admission to the LSE.

A Novel Approach for the LSE

Direct listings have gained traction among technology companies in the United States, with Spotify being a prominent example. However, this marks a new development for the LSE, which concurrently published revised regulations governing this type of listing.

Further details regarding the public offering will be disclosed in a forthcoming prospectus and related statements over the coming weeks.

Bypassing Traditional Investment Banks

Opting for a direct listing, bypassing conventional investment banks and associated roadshows, represents a significant decision. Companies choosing this route often seek to avoid the potential volatility and obligations inherent in a traditional initial public offering (IPO), particularly if they possess sufficient momentum for a direct market entry. Wise indicated early interest through its share offering to existing customers.

CEO Statement

“I am delighted to confirm our plans for a direct listing in London,” stated Kristo Käärmann, CEO and co-founder of Wise. “This process will expand the ownership of Wise, supporting our mission to facilitate faster, cheaper, and more convenient international money transfers.”

“Since announcing our intention to float last week, we have received over 60,000 expressions of interest in our customer shareholder program, OwnWise, which aims to reward customers who purchase Wise shares and maintain their relationship with us. This direct listing is about aligning our mission with our shareholder base, and I am incredibly proud that our customers want to participate.”

Company Performance and Growth

Wise has emerged as a leading success story within the European fintech landscape. Founded by Estonians Käärmann and Taavet Hinrikus, the company has maintained its base in London despite the uncertainties surrounding Brexit.

Currently, its 10 million customers process approximately $7 billion (£5 billion) in cross-border transactions each month, which remains the core of its business, even as it expands into complementary financial services. In its latest fiscal year, Wise’s revenue reached $586 million, an increase from $422 million.

This resulted in a profit before tax of $57 million (£41 million), and the company has been profitable since 2017.

Class B Share Details

Class B shares will carry nine votes per share, are strictly non-transferable, and will expire five years after any listing, subject to certain events. Shareholders and option holders as of May 23, 2021, can elect to receive 50% of their Class A shares with corresponding Class B shares on a 1:1 basis (excluding Kristo Käärmann, who can elect to receive 100% with a 1:1 ratio).

The voting rights associated with Class B shares are capped, ensuring no shareholder can cast more than one vote less than 35% of eligible votes, except for Kristo Käärmann, who, while CEO, is capped at one vote less than 50%. If he ceases to be CEO, this cap will revert to one vote less than 35%. Class B shares are not tradeable and will not be listed.