Should you invest in Wise?
The first trades in Wise shares, under the ticker ‘WISE’ took place yesterday after the fintech went public on the London Stock Exchange. Valued at £7.95bn, Wise is the largest-ever tech listing in London by market capitalisation.
Transferwise started 10 years ago, offering cut price cross currency payments. Over the past decade, it’s grown from a money transfer service into an international bank account. More than 10 million individuals and businesses now have a multi-currency Transferwise account and debit card. It changed its name to Wise in February 2021.
Wise is offering bonus shares to eligible customers via OwnWise. It launched on the London Stock Exchange via a direct listing rather than an IPO.
What is OwnWise?
OwnWise is a Wise program to encourage up to 100,000 of the company’s users to become shareholders. To be eligible, you need to be an active Wise customer living in the UK or EU, and using Wise for your banking and money transfers.
OwnWise members who buy their shares during the eligibility period and hold their shares for 12 months or more will receive bonus shares worth 5% of the initial value of their shares, up to a maximum of £100. They’ll also get to join a private community, and the chance to win a trip to the Wise annual conference and “Mission Days”.
What is a direct listing?
Wise has launched on the stock exchange via a direct listing. Listing this way means that retail and institutional investors can both buy shares at the same time and in the same way, with no one getting preferential treatment.
With a direct listing, the company lists shares that already exist directly on the public markets, with no capital raised. There is no need to hire underwriters. Financial advisers determine the day one price of the stock.
In a traditional initial public offering (IPO) a company sells new or existing shares to investors – managed by an underwriting bank that provides bookbuilding services. Often in an IPO, institutional investors can buy shares first and retail investors can participate after admission to trading.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Wise may have flown into the stock market blindfold, given that by choosing a direct listing, its share price wasn’t decided in advance, but the payments firm has had a smooth landing, with shares rising since trading began.’
“There were 47 million trades in the first half hour, pushing the price up by 3% from the opening auction price of 800p (total trades, not trades just through HL). Shares came out of auction at 820p before dropping slightly and then rebounding to 825p by midday. The launch has put a value of the company of around £8bn, a big step up from the £5bn price tag attached to the company by private investors last July.
“The UK has gone out of floatation fashion with just 5% of companies delivering an IPO choosing London as the launch pad. This particularly worrying because we see IPOs as an opportunity to bring more people to investing for the first time. But now more firms might see direct listings as a good alternative to traditional IPOs which are more costly, needing the input of expensive services from investment banks.”