4 Minute Read by Reuters, LONDON, July 6 – The London Stock Exchange listing of cross-border payments firm Wise IPO-WISE.L this week will put Britain’s future as a fintech hub in the wake of Brexit to the test. The government has been pushing for rules to encourage public listings, as a thriving fintech sector is seen as a way for the British capital to maintain its position as a leading global financial centre in the aftermath of Brexit. Wise, which was previously known as Transferwise, is expected to complete a rare direct listing on Wednesday, with a valuation of 5-6 billion pounds ($6.9-$8.3 billion), according to sources. A dozen investors, entrepreneurs, and experts told Reuters that its IPO will cap a record-breaking year for London listings and could pave the way for several other fast-growing British financial technology companies. “Whether other companies choose to follow in Wise’s footsteps and decide to list will depend on its success when it hits the market,” Sarah Kocianski, head of research at fintech consultancy 11:FS, said, adding that a “old guard” of fintechs are reaching maturity and looking for the best way to cash out. Firms like London-based Revolut and payments firm Checkout.com, which have raised hundreds of millions of dollars from private investors at increasingly high valuations, are among those rising through the ranks. Wise’s growth has paralleled the expansion of British fintech, which has been supported by both regulators and governments, according to a spokeswoman. Wise, co-founded by Estonian friends Kristo Kaarmann and Taavet Hinrikus, has quickly established itself as one of Europe’s leading fintech firms. It has been profitable since 2017 and now has a global customer base of 10 million. Dealroom data from the City of London’s promotional agency London & Partners shows that fintech companies in London raised $4.5 billion from investors in 2020, compared to $185 million when Wise first launched in 2011. “We have seen a host of fintech and financial services companies emerge in the UK since 2015 when they (Wise) first became popular, and I think the Wise listing will give it even more momentum,” Howard Womersley Smith, a fintech and data lawyer at Reed Smith, said of the sector. He went on to say, “It paves the way for fintech entrepreneurs.” Even if the Wise listing is a success, investors and entrepreneurs note that London faces several challenges, including the impact of Brexit on recruiting and other long-standing issues that have plagued British tech. “European workers appear to be less enthusiastic about working in London,” said Ollie Purdue, a partner at Antler, a global early stage venture capital firm. “This is both due to the difficulties around Brexit, combined with the massive efforts by other nations to boost their appeal.” So far in 2021, several tech companies have listed in London, pushing overall initial public offering (IPO) volumes to new highs. However, the results have been mixed, with Deliveroo’s stock falling 30 percent on the first trading day. Due to Deliveroo’s poor performance, it’s possible that British investors will be less enthusiastic about tech companies with high valuations and concentrated power in the hands of the founder than their American counterparts. Wise is hoping to allay any fears with a direct listing that allows investors to choose the valuation, as well as a dual-class share structure that gives all early-stage investors, not just the founders, enhanced voting rights. “Wise’s debut, hopefully, will be the first of many, and momentum will follow. But we mustn’t get carried away… We need to build stronger foundations and provide the IPO environment that these homegrown superstars deserve “Richard Anton, managing partner of venture capital firm Oxx, expressed his opinion. (1 dollar = 0.7222 pounds) Abhinav Ramnarayan and Anna Irrera in London contributed reporting, and Alexander Smith edited the piece./n
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