FinTech: Money Transfer App Wise Gets $11B Valuation In London Direct Listing
Though novel, the direct listing was also a big win for post-Brexit London.
Fintech Wise Plc (LON: WISE) on Wednesday pioneered the direct listing route for a tech company going public on the London Stock Exchange (LSE), and in the process, garnered a solid capitalization of £8 billion ($11 billion). Apart from turning founders Taavet Hinrikus and Kristo Kaarman into billionaires, Wise’s bumper listing also marked a win for the UK, which has set its heart on turning London into a fintech superhub after Brexit. (CNBC)
Wise: Direct listing
Formerly known as TransferWise, Wise’s shares made their trading debut on LSE after a 190-minute auction at 8 pounds. The capitalization of £8 billion, or $11 billion, is more than twice that of the valuation of £3.6 billion ($5 billion) struck in a secondary share sale completed in July 2020.
The direct listing route was originated by Spotify in the U.S. in 2018 and allows existing investors to offload their shares to the public. No additional shares are issued, hence the company received no money from the listing. It is a far cheaper process compared to the traditional IPO route, a factor that was possibly decisive in its choice by Wise, which is focused on eliminating avoidable costs.
Wise is sustainably profitable
Wise pioneered money transfers at competitive rates by chipping away at hidden costs loaded onto customers by banks.
Founded in 2011, the fintech now serves over 10 million people and businesses, helping them move more than £5 billion across borders every month. Compared to regular banks, its customers save about £1 billion annually.
The business of the company turned profitable back in 2017.
In FY2021, Wise moved £54 billion across borders for its customers, representing a volume CAGR of 42% between FY2019 and FY2021.
Revenues grew at a CAGR of 54% over the same period, reaching £421 million. Adjusted EBITDA reached £109m.
“Moving money into another currency is still a maze of hidden exchange rate mark-ups, high fees, delays, and small print for many people,” says Kaarman. “We’re currently saving customers around £1 billion a year in these hidden fees. The £149 billion that’s still to go remains our focus.”
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