British fintech firm Smart plans to go public in London by way of a uncommon direct itemizing

In this photo illustration, the TransferWise logo is displayed on an Android mobile phone.

Omar Marques | SOPA Pictures | LightRakete | Getty Images

LONDON – UK financial technology company Wise said Thursday it expected to go public on the London Stock Exchange through a direct listing.

Wise, formerly known as TransferWise, said it is aiming for a direct listing rather than an IPO as it does not need to raise new capital. Direct listings enable companies to go public without the involvement of underwriters or the issue of new shares.

The company said its public debut will be the first direct listing of a technology company in London.

Founded in 2010, Wise claims it has 10 million customers who use its money transfer service to transfer £ 5 billion ($ 7 billion) each month. The company competes with established companies like Western Union and MoneyGram, and upstarts like Revolut and WorldRemit.

The news of Wise’s debut is a big win for the UK, which is hoping to convince more big tech companies to get listed in London rather than New York. The government is considering proposals to relax London’s listing rules to facilitate the issuance of double-class shares, which will give founders and early backers more control.

“We are taking steps to become a public company in a transparent and fair manner,” said Kristo Kaarmann, CEO and co-founder of Wise, on a conference call Thursday.

“We chose to go direct because everyone from large institutions to clients has an equal opportunity to own part of Wise. It’s cheaper than going public, which helps us keep costs down, and ultimately us in our mission to lower prices. “

Wise was last privately valued at $ 5 billion in a second share sale last year. Because the company is publicly listed on the stock exchange, there will be no stock price process that companies would normally go through in an IPO. The company is aiming for a valuation of up to £ 9 billion, according to a report by Sky News. Company executives said pricing is driven by the market.

Wise opts for a two-class share structure in the standard segment of the main London market. The company announced it would issue two classes of shares, Class A and Class B. The Class B shares would entitle holders to nine additional votes per share. They are not tradable, will not be listed and will expire on the fifth anniversary of Wise’s listing, the company said.

The structure means that Kaarmann has more voting rights than other investors, however, no existing shareholder will have more than half of the voting rights simply by owning class B shares. Investors have raised concerns about governance issues in dual class structures in the past, but Wise says their structure is fair and democratic.

Wise said it will also introduce a customer shareholder program called OwnWise, which would allow users to own an interest in the company. Customers who participate in the program are eligible for bonus shares up to £ 100 ($ 140) after 12 months. They also receive other discounts, such as invitations to biannual “Mission Days”.

“I hope Wise has given other UK tech companies an alternative route to the public markets to ensure we have a thriving tech scene for decades to come,” said Stephen Kelly, chairman of the Tech Nation industry association.

“Britain needs more figureheads and role models to inspire the next generation and it is good to see Wise live its values ​​and join the London Listing family.”

Wise, which has been profitable since 2017, said it had a profit of £ 30.9 million on sales of £ 421 million in fiscal 2021. Income more than doubled from £ 15 million last year, while revenues are up 39% from £ 302.6 million.

Goldman Sachs, Morgan Stanley and Barclays will serve as lead financial advisor to the listing of Wise, with Citi serving as co-advisor.

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