Last month, London-based fintech startup Wise raised £160M (approx €185.35M) in funding. The syndicated facility led by Silicon Valley Bank’s UK & EMEA Corporate Finance team was put in place to help refinance Wise’s existing revolving line of credit.
In a recent development, the company has announced that it is planning to go public on the London Stock Exchange through a direct listing. The company plans to deploy a dual-class share structure that will enable its founders and early investors to retain voting control.
According to the company, the reason it opted to take the Direct listings route is because “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.” This is the first direct listing of a technology company on the London Stock Exchange.
The company claims that its direct listing is possible due to its sustainable approach to growth. Wise has been profitable since 2017, with a 54 per cent revenue CAGR over the last 3 years reaching £421M of revenue in FY2021. It was valued at $5B in a secondary share sale last year.
According to Sky News, Wise is seeking a valuation of up to £9B in its listing.
Transparent and fair IPO listing
Speaking on the development, Kristo Kaarmann, CEO and co-founder of Wise, sys, “Wise is used to challenging conventions, and this listing is no exception. We’re ten years into building a new way to move money around the world – faster, cheaper, easier and completely transparent. A direct listing allows us a cheaper and more transparent way to broaden Wise’s ownership, aligned with our mission.”
“We’re fixing a huge, structural problem on a global scale, and one which requires enormous discipline to solve. Operating sustainably, with a profit margin, helps us track our journey to lower prices for customers as we scale and remove costs. By bringing transparency and fairness into how we price our products, we’ve found a common ground of creating massive value for our customers, and also for our Shareholders.”
The company welcomed its first customer owners by gifting shares to a group of 1800 active customers. Wise says it is their long-term mission to choose shareholders with an understanding of, and passion for, the problem Wise is solving. “A direct listing, combined with a widely available dual class share structure, allows us to bring customers and other like-minded investors into our shareholder base, while keeping the focus on our deeply ingrained mission as we grow at speed,” adds Kaarmann.
Wise reports that 97.5 per cent of people’s international payments are still flowing through banks and other providers, where fees are nearly always hidden. The company believes the experience is slow, broken and it’s just as bad for businesses. “There’s a lot of work ahead – this mission will take us years, probably decades. I welcome more people and institutions joining us as owners of Wise, to build a new, better way for money to move without borders.”
Financial performance
In FY2021, Wise moved £54.4B across borders, for 6 million customers active in the financial year, representing a volume CAGR of 42 per cent between FY2019 and FY2021. Revenues increased by a CAGR of 54 per cent over the same period, reaching £421M in FY2021.
According to the company, it has witnessed a strong demand at the start of FY2022 in terms of personal and business volumes and revenues. In the future, while the impact of the pandemic will remain difficult to predict, Wise expects revenue to grow in the medium-term at a CAGR of over 20 per cent and adjusted EBITDA margin to remain above 20 per cent. As for FY2022, the company expects revenue growth in the low to mid-twenties on a percentage basis.
Customers can join as shareholder through OwnWise
Wise believes its customers should also be given the opportunity to be shareholders as they have the understanding of the problems Wise is solving. And hence, to support and incentivise customers who wish to become Wise shareholders, it established a customer shareholder program, OwnWise.
OwnWise is open for pre-applications from UK eligible customers today and is expected to open to other eligible customers in select countries following direct listing. The company says it will separately notify customers of the other OwnWise opening dates.
OwnWise is limited in its first year to 100,000 participating eligible customers. Eligible customers participating in OwnWise who buy shares in Wise during the eligibility period (based on market value at the time of purchase) and continue to hold these for 12 months will, at the end of such 12 month period, be entitled to:
- receive bonus shares in Wise representing 5 per cent of the value of shares purchased during the eligibility period, up to a maximum value of £100;
- “a chance to win a trip to our Mission Days company conference”
- limited edition Wise swag; and
- the option to join OwnWise community which offers quarterly sessions with Wise’s team and early access to new features and products
“Cheap, fast way to send money abroad”
Wise was launched in 2011 by Kristo Kaarmann and Taavet Hinrikus. Both co-founders wanted to stop the global practice of banks and brokers charging extortionate hidden fees, resulting in expensive, slow international payments. Hence they launched Transferwise (now Wise.com) to help resolve this issue.
The platform provides customers with a lower-cost alternative to traditional means of moving money internationally. The company’s product suite includes the borderless account and debit card, its money transfer service, and its Application Programming Interface (API) for larger enterprises and bank partnerships. It launched new products across the US, Europe, APAC, and the Middle East in 2019 and supports 2500 currency routes and 54 currencies on the whole.
In July 2020, when TransferWise launched its secondary share sale, it reached a $5B (€5.47B) valuation. As reported by the company, currently 10 million people and businesses use Wise, which processes over £4.5B (approx €5.2B) in cross-border transactions every month, saving customers over £1B (approx €1.15B) a year.
Wise holds 62 licences enabling operations in 40 countries. In FY2020 and FY2021, it added five licences, including in the UAE, Malaysia, and Brazil, extending its currency routes across the Middle East, Asia and South America.