London-listed Wise's shares soar on plans to list in US

Shares in Wise, formerly TransferWise, have gained over 12% this morning (5 June) as the payments business looks set to be the latest high profile company to depart London’s stock market.

When Wise (LON:WISE) listed in London in 2021 at an £8 billion valuation, it was seen as a coup for the market. Then-prime minister Rishi Sunak had actively sought to encourage global technology companies to list in the capital.

Wise shares gained 35% since its initial listing to reach a market cap of £11.05 billion as of yesterday’s close. Following this morning’s share price moves Wise is now worth over £12 billion.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

But London’s share of this value looks set to diminish, as Wise shares are set to be dual-listed in London and the US.

“Today we are announcing our intention to dual list our shares in the US and UK,” Kristo Käärmann, co-founder and CEO of Wise, said in its annual results released today. “We believe the addition of a primary US listing would help us accelerate our mission and bring substantial strategic and capital market benefits to Wise and our Owners.”

Wise is now worth over £12 billion based on this morning’s moves, from a little over £11 billion yesterday. However, the news that is seeking a dual listing compounds the momentum for London’s stock exchange exodus.

“A secondary listing will remain in London, but a dual listing makes the company ineligible for FTSE 100 inclusion,” explains Matt Britzman, senior equity analyst at Hargreaves Lansdown.

Wise dual-listing follows on from London exodus

Wise is the latest in a string of companies to have signalled their pessimism towards London’s stock market.

Last month, news broke that Shein preferred Hong Kong to London, dashing hopes that the City could land a blockbuster £50 billion listing.

Mining giant Glencore (LON:GLEN), a stalwart of the FTSE 100, suggested in February that it could move its primary listing to New York in a bid to maximise its valuation. London’s struggles to attract domestic companies to list go back to chipmaker ARM’s decision to list in the US and beyond.

The challenge for the London market is a perceived lack of interest among UK investors. Analysis from Aberdeen in January showed UK retail investors have the lowest level of exposure (as a percentage of wealth) to equities of any G7 company, at just 8% (outside of pensions). That compares to 33% for US investors.

“Keeping a presence in London makes sense, but it does little to sugar coat the fact that yet another London-listed tech firm is looking across the Atlantic for better valuations – a story that’s becoming all too familiar,” said Britzman.

For Wise in particular, there would also be a commercial advantage to be gained by listing in the US. “These include helping us drive greater awareness of Wise in the US, the biggest market opportunity in the world for our products today,” said Käärmann, as well as giving Wise access to “the world's deepest and most liquid capital market”.

Which fintechs could list in London?

Losing one of its largest publicly-listed fintech companies would undoubtedly be a blow for the London Stock Exchange.

Looking ahead though, there is a string of fintechs that could revive London’s IPO market by listing in the capital.

Among these are Monzo, which is still reportedly deciding between London and New York. CEO TS Anil downplayed talk of an imminent IPO following blockbuster results on 2 June, but with revenue having jumped 48% to £1.2 billion, speculation is mounting as to when (and where) the company, valued at £4.5 billion last year, will list.

ClearScore, the London-based credit scoring app, is also putting groundwork in to list within the coming years, and CEO Justin Basini strongly favours a London listing.

Basini doesn’t necessarily view the larger size of the US market as an advantage. “While you still get all the international investors looking at IPOs in London, the attention you get at a smaller market capitalisation is much greater [than in the US],” he told MoneyWeek in February.

Wise annual results

While Wise’s plans to list shares in the US have grabbed the headlines, there were further positives in its results that have driven Wise stock higher this morning.

Revenue increased 15% year-on-year to £1.2 billion while underlying operating profit rose 13% to £296.9 million. Post-tax profits increased 18% to £416.7 million, putting diluter earnings per share at 39.73p.

Underlying free cash flow rose 1534.7% to £332.7 million.