Wise Shifts Primary Listing to New York Amid London’s Challenges
Wise, the London-based fintech unicorn, has announced plans to shift its primary stock listing from the London Stock Exchange (LSE) to the New York Stock Exchange (NYSE). This move encapsulates the growing trend of public companies relocating their primary listings from London amidst increasing challenges in the U.K. market.
Background of Wise and Its Growth Trajectory
Founded by Estonian entrepreneurs Kristo Kaarmann and Taavet Hinrikus, Wise debuted on the LSE in July 2021, during a period characterized by a boom in technology and finance listings worldwide. The initial market capitalization upon offering was approximately $11 billion. As of late October 2023, the company’s market capitalization has risen to nearly $17 billion, indicating strong growth but also highlighting the obstacles facing the U.K. stock market.
Reasons for the Listing Shift
Wise’s decision to list on NYSE is strategic, as it anticipates that such a move will enhance access to a larger pool of investors and strengthen its liquidity. The company has expressed optimism that a primary listing in New York could provide a potential pathway for inclusion in major U.S. indices such as the S&P 500 or the Nasdaq-100, thereby attracting more institutional investors. Nevertheless, Wise acknowledged it doesn’t meet the criteria for immediate inclusion in these indices but believes the shift will ultimately increase its appeal and valuation.
London’s Declining Appeal for Tech Companies
London has historically positioned itself as a financial hub, attracting tech companies seeking to list. However, there’s been a notable trend of high-profile firms abandoning the LSE for U.S. markets. Companies like Ashtead, CRH, and Arm Holdings—valued at $18.5 billion, $61 billion, and $138 billion respectively—have already made this transition.
- IPO vs. Delisting: The stark contrast between 17 IPOs last year and 88 exits underscores the broader malaise in the U.K. market.
- Regulatory Overhaul: The U.K. Financial Conduct Authority (FCA) implemented regulatory changes in July 2022 to simplify listing rules, yet these reforms have yet to reverse the trend of companies seeking domicile elsewhere.
Future IPO candidates and the competitive landscape
Wise’s shift toward a U.S. listing raises further questions regarding potential IPO candidates from the U.K., such as Monzo and Revolut. There are concerns that these companies may be enticed to list in New York rather than London, limiting the options for U.K. investors and further diminishing the vibrancy of the domestic market. Reports indicate that the U.K. Treasury has engaged with these fintech firms to persuade them to keep their IPO plans localized.
Financial Performance Amidst Listing Considerations
Wise’s recent earnings report indicated a robust position, showcasing a 17% increase in pretax profit at £565 million and a 21% surge in customer numbers, now totaling nearly 16 million. These figures underscore Wise’s capability to scale and thrive in a competitive environment while navigating the complexities of its listing decision.
Market Sentiment and Future Prospects
With a shareholder vote anticipated later this month regarding the listing shift, experts expect minimal opposition. Russ Mould, investment director at AJ Bell, suggested that shareholders will likely support the move if it promises to enhance stock value. The anticipation around Wise’s listing strategy illustrates just how critical access to global markets is for rapidly growing companies.
Conclusion
As Wise prepares for a potential migration to New York, it underscores broader systemic issues within the U.K. financial market. The struggles to retain innovative firms highlights a pressing need for the U.K. to adapt and innovate to maintain its stature as a leading financial destination.
Despite its strategic move, Wise continues to maintain operations in London, recently expanding its office space in the tech-driven Shoreditch area, thus illustrating the duality of its position as it seeks to capitalize on opportunities both domestically and internationally.
Wise representatives did not respond immediately to requests for further comments.
Source: fortune