A Wise approach

Wise is a company which has built its business by doing things differently.?Kristo K??rmann and Taavet Hinrikus founded Wise because they felt there must be a better way to move money internationally.?Previously, some of the world’s most vulnerable people were being charged high commissions to send money to family and friends in need.?Ten years later Wise continues on its Mission to build money without borders: providing payments that are instant, convenient, transparent and eventually free. For those who haven’t heard of Wise before (it used to be called TransferWise) it is a profitable and growing global technology business, processing over ￡5bn in transactions every month and saving customers ￡1bn a year.

Wise is a business I’ve followed closely, as one of the UK’s home-grown unicorns, and I was pleased to see the news that it will go public via a direct listing on the London Stock Exchange. Following the Lord Hill and Kalifa reviews, it’s encouraging to see another UK tech business choose to list in London.?There are a just a couple of aspects to the news which I want to share my thoughts on.

Firstly, Wise will direct list, meaning it will not raise any new money as it goes public. Instead, existing shareholders will sell down a portion of their holding to create liquidity and give the opportunity to new investors including Wise customers.?Direct listings are an attractive route to go public - the market sets the price shares trade at, rather than a traditional book build process, and anyone can buy (or sell) straight away. Wise hasn’t raised new money since 2017, instead self-funding its growth as a profitable company, so it doesn’t need to raise new money now.?Not all businesses are in as fortunate a position and while direct listings are common in the United States, I believe that Wise is the first UK company to go down this avenue. I look forward to many more.

Wise is also adopting a time-limited dual class share structure, something which is again fairly common in the US, but seems to attract contention in the UK.?Usually a dual class structure is used to protect the rights of a founder, for example The Hut Group, and there are good reasons for this.?However, what Wise has done is different yet again.?It offered all existing shareholders, from early-stage VCs through to Wisers (those are what it calls its employees), the option to receive 50% of their holding in shares with a higher proportion of voting rights. This means that those who have supported Wise’s Mission over the last ten years can continue to do so as the company transitions into the public markets.?There is logic that the team that created the successful vision, strategy and brilliant execution continues to lead the decision-making for the growth journey ahead.

Lastly, Wise plans to reward customers who invest in its Mission by becoming shareholders. Wise already gave away 2,000 free shares to its top customers but they’re using the direct listing to go a step further.?It’s great to see a business recognise the importance of alignment between investors and customers. Putting customer’s needs at the heart of the business is always a recipe for success and growth.

As Kristo K??rmann said when announcing the news “Wise is used to challenging convention, and this listing is no exception.” I hope Wise has opened an alternative avenue to the public markets for other UK technology businesses to ensure we have a thriving tech scene for decades to come.?The UK needs more poster-children and role models to inspire the next generation and it is good to see Wise live it’s values joining the London listing family. A warm welcome today”