Wise (formerly TransferWise), the UK-based cross-border transactions specialist is planning an IPO as soon as next month that could value it at up to $7 billion. Reports today suggest the London Stock Exchange (LSE) is now the host exchange the fintech has committed to, having beaten off competition from Amsterdam and New York, which had also been assessed.
Wise has appointed Morgan Stanley and Goldman Sachs to run the deal and while the choice of London is not yet locked in it is now considered the strong favourite for the listing. A Wise spokeswoman yesterday declined to comment on the reports.
A large Wise IPO, almost as big as this week’s Deliveroo IPO that eventually valued the food delivery company at £7.6 billion, the bottom of its targeted range, would be a further boost for London. Online greetings cards company Moonpig and consumer reviews platform TrustPilot are among a recent spate of internet companies to opt for London.
The LSE has traditionally often lost out to Wall Street as a host for high growth companies, particularly in the technology and life sciences and biotech sectors. Founders and investors often reach the conclusion that the USA’s capital markets understand high growth technology companies better than the UK’s. And have a greater appetite for risk.
It’s an opinion that was again expressed this week by Alex Chesterman, founder and CEO of online second-hand car retailer Cazoo, which has opted for a SPAC IPO in the USA later this year. However, recent updates to premium listing rules like allowing dual-class share structures for a limited time and a reduction of the minimum quota of shares made available for public trading, down to 15% from 25%, has encouraged a number of the companies they were designed to entice to decide on London IPOs.
It will also be something of a relief for the City that Deliveroo’s record 30% drop in value as it started conditional trading on Wednesday doesn’t appear to have put Wise off following in its London footsteps.
Wise was founded in 2011 by the Estonian entrepreneurs Kristo Kaarmann and Taaver Hinrikus. The pair were both based in London and frustrated at the cost of sending money back to Estonia from the UK. Wise, which runs its own network of international accounts that mean it can bypass the usual bank-run international payments systems and offer significantly fees, was the result.
At its last private fundraise last year, Wise raised $319 million at a $5 billion valuation. It has since reported a 70% leap in revenues to £302.6 million over the past financial year. That netted it a net profit of £21.3 million. Unlike many quickly growing technology and fintech companies, Wise is not only profitable but consistently so, having now booked net profits for the fourth consecutive year.
The company will hope to ride a fresh bull market for technology companies, which have this week recovered from recent volatility to lead the S&P 500 to a new record high, breaking through the 4000 points level for the first time.
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