Wise (formerly TransferWise) confirms direct listing on the LSE in early July, reportedly at a $6B-$7B valuation

Following Wise’s announcement earlier this month that it planned to go public by way of a direct listing on the LSE, today the company made the news formal with a regulatory filing. The London-based company — formerly known as TransferWise and primarily in the business of transferring money across different currencies — with 10 million users said it plans to list in “early July 2021” but did not provide further details on pricing of its class A shares, in keeping with how direct listings work. It’s been reported, however, that the plan is for the valuation to be in the range of $6 billion to $7 billion with the listing.

(Overall, Wise has put in place a dual-class share structure in place with two classes of shares in issue, class A shares and class B shares, in order to support Wise’s focus on its mission as it transitions into the public markets, it noted. Class B shares are not tradeable.)

“The Company will not set a price in respect of the class A shares or offer any class A shares in connection with the direct listing,” it noted in the statement. “The opening price of the class A shares will be determined in the opening auction on the date of Admission.” While direct listings have somewhat taken off as a route for tech companies to go public in the U.S. — a trend spearheaded by another European juggernaut, Spotify — this is a new turn for the LSE, which published its own new rules on the process the same day that Wise announced its plans.

In the meantime, we can watch for more details around the public offering, and updates about the company’s business, will be coming out in a prospectus and other related statements in the coming days and weeks.

Bypassing the big investment banks and the related roadshow of a more conventional listing can be a bold move, one that companies who want to avoid the volatility and commitment of that process might opt to take if they feel they have enough momentum to hit the market directly. Wise in its statement today hinted that there has been some early interest, based on its share offering to Wise customers.

“I am pleased to confirm our plans for a direct listing in London. This process will broaden the ownership of Wise, in support of our mission to move money around the world faster, cheaper and more conveniently,” said Kristo Käärmann, CEO and co-founder of Wise, in a note in the statement. “Since announcing our expected intention to float last week, we’ve had over 60,000 expressions of interest in our customer shareholder programme, OwnWise, which is designed to reward customers who buy Wise shares and stick with us for the longer-term. This direct listing is about further aligning our mission and our shareholder base and I’m enormously proud that customers want to be a part of that.”

Wise has been one of the huge success stories for fintech coming out of Europe, and London — founded by Estonians Käärmann and Taavet Hinrikus, the company’s been based out of London and has stuck with that even through all the financial turmoil of Brexit. Its 10 million customers currently process around $7 billion (£5 billion) in cross-border transactions every month, which remains its primary business even as it diversifies into newer, related areas of financial services. In its most recent financial year, Wise’s revenue grew to $586 million, up from $422 million. That represents $57 million (£41 million) in profit before tax, and the company says it has been profitable since 2017.

Class B shares will hold 9 votes per share, are strictly non-transferable and, amongst other voting right cancellation events, expire on the fifth anniversary of any listing, the company confirmed. Wise’s shareholders and holders of vested options as at 23 May 2021 are entitled to elect to receive 50% of their class A share holding in the Company with additional corresponding class B shares on a 1:1 basis (save for Kristo Käärmann, CEO and co-founder of Wise, who is entitled to elect to receive 100% of his class A share holding in the Company with additional corresponding class B shares on a 1:1 basis), it added.

“The voting rights attaching to the class B shares are, subject to certain regulatory approvals, capped so that no shareholder can, by virtue of the class B shares they hold, cast more than one vote less than 35% of the eligible votes in respect of any shareholder decision (save for Kristo Käärmann who, for so long as he is CEO of the Company, will be capped in respect of his class B shares at one vote less than 50% of the eligible votes in respect of any shareholder decision and if, at any time, he is not CEO of the Company he will be capped at one below 35% of the eligible votes in respect of any shareholder decision). The class B shares are non-tradeable and will not be listed.”