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British fintech firm Wise is planning to go public in London via a rare direct listing

British fintech firm Wise is planning to go public in London

June 18, 2021: -On Thursday, British financial technology firm Wise said it expects to go public on the London Stock Exchange through a direct listing.

Wise, formerly known as TransferWise, said it was seeking a direct listing rather than an initial public offering as it doesn’t need to raise any fresh capital. Natural listings allow companies to go public without involving underwriters or issuing new shares.

The company said its stock market debut would be the first direct listing of a tech company in London.

Founded in 2010, Wise says it has 10 million customers who use its money transfer service to send £5 billion each month. The company competes with incumbents, including Western Union and MoneyGram, and upstarts like Revolut and WorldRemit.

News of Wise’s debut marks a big win for Britain, hoping to convince more large tech firms to list in London rather than New York. The government is considering proposals to relax London’s listing rules, making it easier to issue dual-class shares, which give founders and early backers more control.

“We’re taking steps to become a public company in a way that’s transparent and fair,” Kristo Karmann, CEO and co-founder of Wise told reporters on a conference call on Thursday.

“We chose a direct listing because everyone has the same opportunity to own a part of Wise, from large institutions to customers. It’s less expensive than an IPO which helps us keep costs down and ultimately helps us on our mission to lower prices.”

Wise is opting for a dual-class share structure on the standard segment of London’s primary market. The firm said it intends to issue two classes of shares, class A and class B. The class B shares would entitle holders to nine extra votes per share. They are non-tradable, will not be listed, and expire on the fifth anniversary of Wise’s listing, the company said.

The structure means that Karmann will be entitled to more voting rights than other investors, but no existing shareholder will have more than half of the voting rights purely by holding class B shares. Investors have raised concerns in the past over governance issues in dual-class structures. However, Wise says its system is fair and democratic.

Deliveroo, which chose a dual-class structure, sank as much as 30% on the first day of trading in March in one of the worst IPOs in London’s history. However, the food delivery app’s float was overshadowed by other issues, including its treatment of gig workers and questions around profitability.

“I hope Wise has opened an alternative avenue to the public markets for other U.K. technology businesses to ensure we have a thriving tech scene for decades to come,” said Stephen Kelly, chair of industry body Tech Nation.

Goldman Sachs, Morgan Stanley, and Barclays will lead financial advisors for Wise’s listing, with Citi acting as co-advisor.

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