Wise Plc just fired the latest warning shot for British bankers and lawmakers trying to get more IPO prospects to choose London — particularly in the fintech sector.
The £12 billion money-transfer company said Thursday it will switch its primary listing to the US, the latest blow to the UK’s reputation. It comes just months after Klarna Group Plc chose to go public in the US, though those plans are now on hold. Challenger banks such as Revolut Ltd. are also considering New York listings as they begin early preparations for public debuts of their own.
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“Wise was at the vanguard of UK fintech’s initial success — it is a real shame we have to defer to the US as the catalyst for its next stage of growth,” said Devin Kohli, general partner and co-founder of London-headquartered Outward VC. “This is yet another demonstrable example — if one were needed — of the inadequacy of the UK capital markets to understand, attract and maintain high-growth companies.”
For years now, low valuations and weak liquidity in London’s markets have been pushing companies to list elsewhere. But the pressure is perhaps most acute in the fintech space, an area where the city has long dominated and has been held up as a much-needed engine for economic growth in the UK.
While it’s long been feted as one of Britain’s fintech success stories, Wise has had mixed feelings about its home base for years.
Taavet Hinrikus, the money transfer company’s co-founder, got up on stage at a conference in 2017 and declared: “While we’re happily headquartered here in London, if I were setting up TransferWise today I would not choose London.”
As Hinrikus reeled off the damaging effects of Brexit on his business, among the audience were Mark Carney, then governor of the Bank of England, and former Chancellor of the Exchequer Philip Hammond.
By London standards, Wise’s time on the stock market has been a success. Since debuting in July 2021, its shares have increased more than 30%. Still, Wise has never been eligible for the FTSE 100 index despite a series of reforms meant to make the market more attractive to fintechs.
Inclusion in those kinds of indexes can unlock billions of pounds worth of investment from asset managers with funds that track the benchmarks.
That was ultimately the final straw for Wise executives. On Thursday, they said moving their primary listing to the US will allow institutional and retail investors in the US to buy up its shares, noting many of them are currently unable to do so. The move should increase liquidity in the firm’s stock, allowing current shareholders “greater flexibility and opportunity to buy and hold our shares,” the company said.
To be sure, listing in the US might not be the magic bullet companies think it is. US markets have been on edge under the changing policies of US President Donald Trump. And London Stock Exchange Group Plc has previously argued companies that have moved their main listing overseas in recent years have not seen their valuations improve dramatically.
Nevertheless, Wise’s announcement put a dampener on London’s inaugural SXSW, which is meant to showcase the city as a gateway to the world. Tech employees, music fans and investors gathered this week in Shoreditch — the same neighborhood as Wise’s head office — to hear speakers such as the London Mayor Sadiq Khan, who attacked the “inward-looking mentality” across the Atlantic.
Revolut plans
That Revolut — a company that has made little dent in the US, serves 11 million customers in the UK and was started in a fintech incubator in London’s Canary Wharf neighborhood — would consider a New York listing should perhaps be the starkest warning sign for British lawmakers.
The firm gained its UK banking license last year, after several years of delays, and reached a $45 billion valuation in its most recent private share sale. The biggest buyers in that offering were all US-based funds: Tiger Global, Coatue and D1 Capital Partners.
Treasury ministers met Revolut as part of industry roundtables on the capital markets several times over the past year, yet people familiar with the company have said Revolut is leaning toward the US as it prepares for a listing no sooner than 2026.
Revolut boss Nik Storonsky said in a podcast late last year that the UK market is “much worse” and it’s “not rational” to list in London.
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Klarna, the Swedish buy-now-pay-later company, once looked like it could be the next blockbuster listing in London. The firm set up a UK holding company in preparation for an IPO but instead filed for a listing in the US in March. The plan is on hold following April’s tariff-fueled volatility.
The UK still has a clutch of fintech “unicorns” worth more than a $1 billion apiece that could, one day, provide a boost to its equity markets. Zopa Bank, Zilch, Starling Bank, ClearBank and OakNorth Bank are some of the homegrown companies in the IPO pipeline. All are members of the Unicorn Council, which has met with Treasury officials to discuss protecting the fintech industry.
Kunal Jhanji, managing director and partner at Boston Consulting Group, said there are around 20 UK fintechs ready to list, representing about half of the total number across Europe. “Though regulatory reforms of the UK capital markets are progressing well, the UK must expedite these efforts,” he said.
Relaxing rules
Several UK chancellors have tried to champion the fintech industry as a source of growth since Brexit and the pandemic, from Rishi Sunak setting out his vision for “the world’s pre-eminent financial center” in 2021 to the incumbent Rachel Reeves calling fintech “a priority growth opportunity” in a speech in April.
Their policies have focused on making life easier for fintech companies to raise the money they need to expand. The Hill review, for example, supported the idea of startups such as Wise keeping their dual-class share structure when joining the public markets.
More recently, regulators have been working on a new market for private share sales, which lawmakers hope will cater to companies such as Monzo and Revolut that need to sell stock but aren’t prepared to commit to a full public listing.
The Private Intermittent Securities and Capital Exchange System, or Pisces, was unveiled last year and the final rules are due to be announced this month.
The government is also pushing pension funds to allocate more capital to private markets and the domestic economy, in a bid to bring back a former source of capital for the UK equities, which has largely drained away in search of better returns elsewhere.
For all their work, though, liquidity hasn’t improved. Take Wise, whose trading volumes are significantly lower than US-listed peer Western Union Co., even though its market capitalisation is more than five times larger.
Wise is planning to circulate its plans to investors in the coming weeks and will hold a vote on the proposed US listing at the end of July.“We have our current shareholders who would like to own more, but they can’t, because there is not enough trading volume for them in our shares,” Kristo Kaarmann, Wise’s co-founder and chief executive officer, said in an interview. “For most people, that is not a challenge. But for really large holders, that is.”
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