Wise listing predicted to value company at £7bn

Wise has today announced its direct listing on the London Stock Exchange.

The listing is expected to give the company a market capitalisation of more than £7 billion, according to Refinitiv prices on Wednesday.

An auction process took place prior to the FinTech’s debut to establish its share price. The indicated mid-price was 750 pence at 7.45am.

Wise shares trading officially began around 10am on Wednesday.

According to Wise, formerly known as TransferWise, it is the first technology company to opt for a direct listing on the LSE.

The FinTech said that in contrast to a traditional Initial Public Offering, a direct listing is “a fairer, cheaper and more transparent way for Wise to broaden its ownership.”

Last month, the company’s chief executive Kristo Käärmann said that the move would ensure “everyone gets the same opportunity” as large institutions to own a part of the business.

The direct listing means that Wise does not need to attract new investment, instead existing shares held by the company's shareholders will be tradable.

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

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

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that the listing would be another test for London as a FinTech hub while the UK continues to grapple with its post-Brexit status.

“In 2021 alone the company processed £54 billion in payments, with users attracted by the low fee structure compared to other banking transfer services,” said Streeter. “It’s expanded from a personal peer-to-peer service to offer businesses faster payments solutions and that is an attractive feature of its growth prospects.”

Streeter warned: “But there are plenty of risks ahead: the company has rivals snapping at its heels in the revolutionary world of payments and to stay competitive it may be forced to cut fees faster than it can reduce costs. Excessive volatility in currency markets could also affect its profits.”

The listing comes as Wise releases figures that shows there are £150 billion worth of hidden fees paid on foreign currency each year.

These fees are either extracted through an exchange rate mark-up or a rate mark-up plus additional fees.

The same research shows that only 4 per cent of surveyed bank customers understand what they are being charged in these transactions.

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