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Hopes of a fintech-powered City markets revival may have been crushed on Thursday after money transfer firm Wise ditched its primary listing.
The embattled London Stock Exchange was dealt its latest blow as the UK fintech opted for a dual listing across the Atlantic but with the US acting as its primary base.
It’s no secret the Treasury and market officials had been banking on a fleet of fintech listings to boost the market.
Chancellor Rachel Reeves and City Minister Emma Reynolds have courted a number of top names to advocate for a London float.
But with big names such as Monzo, Revolut and Zilch speculated to be gearing up for a float, Wise’s decision may offer a glimpse into the market’s future.
Treasury’s fintech hopes are waning
Claire Trachet, chief executive of tech advisory firm Trachet, said: “There was a moment when fintech was meant to be the crown jewel of London’s IPO revival.
“But Wise’s move makes it painfully clear that the spark the Treasury hoped for is flickering – and that UK markets still aren’t matching the needs of high-growth companies.”
Wise said the transfer would help “significantly enhance [its] profile” and “closely align with major growth opportunities”.
The firm floated on the London market in 2021, where it was valued at £8.75bn.
Despite rumours it was eying a FTSE 100 listing earlier this year, chief executive Kristo Käärmann said the US hosted “the biggest market opportunity in the world” and enabled “better access to the world’s deepest and most liquid capital market”.
But this isn’t the first time a fintech chief gave their crushing assessment of London markets.
Revolut’s chief executive Nik Storonsky said a London listing was “not rational” when compared to the offerings of a US listing.
“If you look at trading in the UK, you always pay a stamp duty tax which is 0.5 per cent. I just don’t understand how the product which is being provided by the UK can compete with the product provided by the US,” Storonsky said on the 20VC podcast.
Treasury officials have been desperate to shake the image that London could not compete with New York as it placed growth and deregulation at the forefront of its agenda.
City market narrative sours
Lee Holmes, chief executive of INFINOX, said Wise’s move “adds weight to a growing narrative that UK and European public markets are struggling to retain, let alone attract, leading homegrown tech players.”
The growing London Stock Exchange exodus, which has included the likes of tech darling Darktrace and Paddy Power owner Flutter, has tainted market sentiment and recent listings have done little to fuel optimism.
Fintech firm CAB Payments launched an IPO on the LSE in July 2023 debuting with a £851m valuation.
But after a profit warning and adverse market conditions in cross-border payments, CAB’s share price plummeted 70 per cent.
Speculation has mounted for a blockbuster £6bn listing from fintech darling Monzo after reports the neobank was calling in investment bankers.
But TS Anil, Monzo’s chief executive, has dismissed hopes, repeatedly saying a public listing was “not a priority”.
Despite the City buzz, there still remains uncertainty where the digital bank will choose to lift with rumours Anil is leaning towards a US IPO whilst the board is inclined to remain at home in London.
Fintech need a reason to stay
Reeves wooed fintech bigwigs at Innovate Finance’s global summit in April with her pledge to make the UK the best place to “start up, scale up and list”.
But the Chancellor’s talk has failed in convincing firms of the prospect of the London market.
Trachet said: “London still offers some of the strongest post-IPO trading conditions in the world.
“But founders are making trade-offs, and without a bold, unmissable signal from the government, fintech will increasingly treat the LSE as a second choice.”
Deregulation efforts this far have included the abolition of the Payments System Regulator (PSR) but fintech firms may need to see bigger swings.
Tratchet said: “If we want fintech to anchor the future of the UK economy, we need to give it a reason to stay. That means liquidity, visibility, and ambition.”
The Treasury’s inaugural Financial Services Growth Strategy will be published on July 15, where leaders will be awaiting any action from the government.
Innovate Finance’s fintech unicorn council attended a summit with the Treasury earlier in the year as the government generated ideas for the upcoming strategy.
The fintech executives had been asked to come “armed with ideas about how to improve UK competitiveness,” sources told Sky News.
Armed with a wish list from the industry’s biggest players, the Treasury’s upcoming July strategy could mark a make-or-break moment.
Fintech leaders will be watching closely for concrete action – and the future of a London Stock Exchange revival may hinge on it.