The British fintech unicorn Wise has a record-breaking direct listing, one that has great potential to inspire other tech firms to go public in the following months.
Shares of Wise, a cross-border payments company previously known as TransferWise, opened at €8 a share the morning of Wednesday, July 7. By the time the market closed, the stock had risen to €8.88, up almost 10%. The company ended the exchange valuing $11 billion, giving them the title as London’s biggest tech company to list on the London stock exchange, in terms of market capitalization. This is an amazing accomplishment for Wise! The company was expected to hit the $6 billion market in 2021, a number they greatly surpassed on this day.
“London has the potential to be a global fintech centre, and someone like Wise listing on the stock markets gives other companies options,” Rosh Wijayarathna, the Head of Corporate Finance EMEA at Silicon Valley Bank, said to Reuters.
The UK stock market strives to attract more tech companies, meaning Wise’s debut is a great win for the UK overall. Their debut has inspired many companies to consider making their own market debut. One of the biggest deciding factors as to whether companies will go through with a market debut is how Wise shares trade in the following few weeks. If shares fall, it could scare companies back into not making a market debut, but if shares rise, it will give these companies more reason to go for it.
To give some insight, listing as a ‘direct listing’ is a pretty rare form of going public where private backers sell existing shares to the public rather than the company getting help from an intermediary. Wise’s debut showed other firms that it is possible to go public without the help of underwriters. That being said, this success story could lead to more firms viewing direct listing as a good alternative to the more costly traditional IPO. Direct listing has already grown in popularity among tech companies such as Coinbase and Spotify, both United States companies.
Many tech companies plan to list in the London Stock Exchange in the following year or so, as well as many banks considering going public in the same period. Britain’s Checkout.com and Swedish “buy now pay later” company Klarna — Europe’s biggest fintech unicorn — are two of the banks planning to do so.
Ramnarayan, Abhinav. “A Wise Move? London Listing May Open Fintech Floodgates.” Reuters, Thomson Reuters, 8 July 2021, www.reuters.com/technology/wise-move-london-listing-may-open-fintech-floodgates-2021-07-08/.