London passes tech test as Wise valued at £8bn in direct listing

·Senior City Correspondent, Yahoo Finance UK
·3-min read
Wise co-founders Taavet Hinrikus, left, and Kristo Käärmann
Wise co-founders Taavet Hinrikus, left, and Kristo Käärmann. Photo: Wise

British-headquartered money transfer business Wise celebrated a successful stock market listing on Wednesday, avoiding the banana skins that hit fellow tech businesses like Deliveroo (ROO.L).

Wise was valued at around £8bn in a direct listing in London on Wednesday morning. The fintech business saw trading in its shares settle at £8 by late morning in London and ticked higher to £8.27 as official trading commenced. 

Wise joined the London Stock Exchange through a direct listing – an unusual listing route that saw shares simply posted for trading on the index with no reference price. A lengthy early opening auction was used to settle the debut price. More than 43m shares worth £350m had changed hands by 11.20am.

Read more: Wise move: Tech giant chooses London for blockbuster $6bn listing

Wise's direct listing was seen as a crucial test of London's appetite for tech businesses after rocky debuts for the likes of Deliveroo and Alphawave IP (AWE.L) earlier this year.

Analysts had suggested the company could be valued at between £7bn and £9bn in the float, meaning Wednesday's debut is likely to be seen as a success.

“Our listing is incredibly exciting, and lots of hard work from many people has made it a reality," chief executive and co-founder Kristo Käärmann said in a statement. "But, it’s important to remember that we’re still very early on in our journey. 

"Moving money into another currency is still a maze of hidden exchange rate mark-ups, high fees, delays, and small print for many people.”

Read more: Wise boss Kristo Kaarmann on 'cool' listing that will turn customers into investors

Käärmann co-founded Wise, originally known as TransferWise, in London in 2011 with fellow Estonian Taavet Hinrikus. The pair baulked at the high fees charged for international money transfer and set about using technology to push costs down. The company now transfers over £5bn for customers each month and claims to save them £1bn a year in fees.

"Wise is a disruptor in the international remittances space which has previously been dominated by international banks and a handful of incumbent wire transfer businesses like Western Union and Moneygram," said Dan Thomas, a senior technology analyst at Third Bridge.

"Wise doesn’t actually wire money in the same way as a Western Union or Moneygram. Rather, it holds balances in countries on popular currency routes to sidestep the high fees associated with conventional wire transfers.

"Wise has a distinct advantage over peers like Western Union and Moneygram because origination is 100% digital and they don’t have to maintain a network of physical locations to disburse cash."

Wise offered its customers a chance to buy shares in the business as part of the direct listing. The company said 125,000 people applied for an allocation of 100,000, with distributions decided through a lottery.

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