Shares of Wise, known previously as TransferWise, surged by over 12% on June 5, driven by the company’s announcement of plans to dual-list its shares on both the London and U.S. stock exchanges. This marked another significant moment in a growing trend of tech firms opting for primary listings in U.S. markets. Initially listed in London in 2021 with an impressive valuation of £8 billion, Wise’s current valuation has now surpassed £12 billion, reflecting a 35% increase since its debut.
When Wise made its London debut, it was seen as a milestone for the British stock market, gaining the backing of former Prime Minister Rishi Sunak, who had actively encouraged high-profile tech firms to list in the City. This backdrop contributed to the initial excitement surrounding Wise, which has been heralded as a success for the UK financial landscape. However, the latest developments signal a shift in sentiment, as the allure of the U.S. capital markets increasingly overshadows London.
Kristo Käärmann, co-founder and CEO of Wise, stated in the company’s annual results that the intent behind this dual listing is to tap into the substantial strategic and capital market benefits offered by the U.S. market. “We believe the addition of a primary U.S. listing would help us accelerate our mission and bring substantial strategic and capital market benefits to Wise and our owners,” Käärmann emphasized, noting the potential for increased visibility as a primary motivation.
The implications of Wise’s decision extend beyond its own business; they mirror a broader pattern of dissatisfaction among firms regarding London’s stock exchange. Analysts suggest that a dual listing will maintain Wise’s presence in London but could also result in the company being ineligible for inclusion in the FTSE 100 index. Matt Britzman, a senior equity analyst at Hargreaves Lansdown, articulated the broader context: “Keeping a presence in London makes sense, but it does little to sugarcoat the fact that yet another London-listed tech firm is looking across the Atlantic for better valuations — a narrative becoming all too familiar.”
Wise is not alone in this pivot away from London. Recently, the fast-fashion giant Shein announced its preference for a Hong Kong listing over a London debut, a decision that dashed hopes for a major £50 billion listing. Similarly, mining behemoth Glencore has floated the idea of relocating its primary U.S. listing in an effort to maximize its valuation—an alarming trend for London’s financial standing.
This exodus appears driven in large part by a lack of interest from UK investors in engaging with stock equities. A study from Aberdeen released earlier this year revealed that UK retail investors hold the lowest level of equity exposure—just 8% of their wealth, excluding pensions—of any G7 country. In comparison, U.S. investors report an equity exposure of approximately 33%, highlighting a stark difference in market engagement.
Despite Wise’s plans to gain a foothold in the U.S., the company reported positive annual results that may mitigate any immediate concerns regarding its future in London. Revenue witnessed a year-on-year increase of 15%, reaching £1.2 billion, while underlying operating profits rose 13% to £296.9 million. Post-tax profits also climbed by 18%, hitting £416.7 million, showcasing the company’s strong financial health even amidst significant strategic shifts. Furthermore, the underlying free cash flow soared a staggering 1534.7% to £332.7 million, reinforcing investor confidence and possibly justifying the stock price uptick.
Looking ahead, the departure of a prominent fintech such as Wise could impact London’s appeal, yet it could also provide an opening for emerging fintech firms to consider listings in the UK. Companies like Monzo are reportedly evaluating their own options between London and New York, while ClearScore is laying the groundwork for a potential IPO, favoring a London listing. CEO Justin Basini stated earlier this year that he perceives advantages to a London listing, asserting that the attention received in a less fragmented market can outweigh the benefits of a larger pool of international investors in the U.S.
The ongoing evolution of Wise’s listing strategy offers insight into the changing dynamics of global finance. As companies increasingly seek capital market opportunities in more favorable environments, the ramifications for London’s stock market could be profound. The decisions made by both established and emerging firms may redefine the attractiveness of the UK capital markets as they navigate this complex landscape in pursuit of growth and valuation.
In conclusion, Wise’s dual listing is emblematic of a larger trend that reflects both the challenges facing the London stock market and the imperative for growth that many tech firms encounter in the current economic climate. As the financial world watches how this situation unfolds, it will reveal deeper insights into the future landscape of global investment and the stocks that may dominate it.