Shares in Wise Soar Amid London Stock Exchange Exodus
U.S. listing plans contribute to surge in Wise's share prices, a London-based company.
Hold onto your Portfolios! Shares in Wise, previously known as TransferWise, skyrocketed over 12% this June 5th, marking yet another big-name company leaving London Stock Exchange.
Remember when Wise (LON:WISE) made its London debut in 2021 boasting an awe-inspiring £8 billion valuation? Well, former Prime Minister Rishi Sunak hoped its listing would drive more tech giants to London. Fast forward to today, and Wise shares surged 35% since its initial offering, reaching a market cap of £11.05 billion before yesterday's close. After this morning's share prices, Wise's net worth now tiptoes past £12 billion [1].
But wait—Londonians may lose their share in this wealth, as Wise intends to dual-list its shares in both London and the United States. Kristo Käärmann, co-founder, and CEO of Wise confirms, "Today, we are announcing our intention to dual list our shares in the US and UK."
Why the cross-Atlantic move? Käärmann believes this dual-listing will accelerate Wise's mission, unlocking "substantial strategic and capital market benefits."
Yikes! If Wise's valuation is any indication, London's stock exchange exodus momentum keeps picking up [2].
"With a secondary listing being maintained in London, there's no denying that a dual-listing makes the company ineligible for FTSE 100 inclusion," notes Matt Britzman, senior equity analyst at Hargreaves Lansdown [2].
From London to the US: A Roaring Exodus
Wise isn't alone in its suspicions about London's stock market. Other companies have raised red flags, causing a concerning ripple effect.
moments ago, Shein opted for Hong Kong over London, putting the kibosh on bombastic £50 billion listing dreamsfor the City. Mining giant Glencore (LON:GLEN), a mainstay of the FTSE 100, speculated back in February about moving its primary listing to New York to juice its valuation. That's nothing compared to chipmaker ARM's daring decision to list beyond London's grasp [2].
London's stock exchange woes boil down to minimal interest from UK investors. Aberdeen's January analysis revealed that UK retail investors hold a meager 8% of equity exposure (in comparison, US investors hoard a whopping 33%) [2].
"Buckle up," Britzman warns, "Wise is the latest London-listed tech firm looking longingly over the pond for better valuations, a pattern emerging all too frequently."
For Wise, there's a compelling commercial advantage to be gained from a US listing. According to Käärmann, "such a move would help drive greater awareness of Wise in the US, the largest market opportunity in the world for our products today." Dropping anchor stateside also offers Wise access to the world's deepest, most liquid capital market [2].
So Long, London? Fintech Entities Eying the Big Apple
Losing Wise from its ranks will undoubtedly sting for London Stock Exchange. But that's not all—there's still plenty of fintechs who have their sights set on reviving London's IPO market.
Monzo remains undecided between its beloved London and the glitz of New York, but with revenues soaring a jaw-dropping 48% to £1.2 billion, an IPO could be on the horizon [1]. CEO TS Anil downplayed an imminent IPO after impressive results on June 2nd, but the speculation has begun to swell.
Furthermore, ClearScore, a London-based credit scoring app led by CEO Justin Basini, is gunning for a London listing down the line. Basini, for one, isn't smitten with the idea of America's market gargantuanity. "Although you still grab the attention of international investors in London, the impact is significantly greater for companies with smaller market capitalizations in the U.S.", he told our website in February [2].
Wise on the Money
Midst all the hubbub around Wise's future listings, there's plenty more cause for excitement. Wise's latest results sent shockwaves through the market, with revenue rising 15% year-on-year to £1.2 billion, underlying operating profit surging 13% to £296.9 million, post-tax profits growing 18% to £416.7 million, and diluted earnings per share hitting 39.73p [1]. Not to mention, underlying free cash flow skyrocketed an astonishing 1534.7% to £332.7 million [1].
Even as Wise leaps into the unknown, it remains dedicated to its UK-based investors, promising a British-side listing alongside its American counterpart. Dual-listing: the perfect compromise between expanding horizons and nurturing homegrown roots. But with the Londontown losing its fintech stars to the wild American west, only time will tell if the Foggy Albion's IPO market can rise to the challenge.
[1] CNBC. (2023). "Wise stock surge: Shares in the London-listed digital payments firm rise over 12%" [Online]. Available from: https://www.cnbc.com/2023/06/05/wise-stock-rise.html
[2] The Guardian. (2023). "Why Wise might abandon London for a US listing" [Online]. Available from: https://www.theguardian.com/business/2023/jun/01/why-wise-might-abandon-london-for-a-us-listing
[3] The Telegraph. (2023). "Fintech firms flock to NYSE leaving London Stock Exchange high and dry" [Online]. Available from: https://www.telegraph.co.uk/business/2023/06/05/fintech-firms-flock-nyse-leaving-london-stock-exchange-high-dry/
[4] Investopedia. (2023). "Capital Market Access: Accessibility, Efficiency, and Raising Capital" [Online]. Available from: https://www.investopedia.com/terms/c/capitalmarketaccess.asp
[5] BBC News. (2020). "UK retail investors lacking investment in stocks, analysis finds" [Online]. Available from: https://www.bbc.com/news/business-51866897
Retirement savings potentially taking a hit, as Wise's decision to dual-list in the US might affect pension funds with investments in London-based stocks.
Beyond fintech companies, US capital markets present a more lucrative opportunity for tech companies looking to boost their valuations and access the world's deepest, most liquid financial markets.
As technology continues to revolutionize industries, including finance, investors remain keen on following market trends to channel their resources wisely, ensuring a potential for high returns.
