British money transfer company Wise is going public on the London Stock Exchange using a direct listing method that was once pioneered by Spotify.
For those unaware, music streaming giant Spotify had gone public in the United States in 2018 using a direct listing method. It is basically an alternative to a traditional IPO route, in which companies that list directly do not require to raise fresh capital or issue any new shares.
Direct listing helps to avoid steep underwriting fees as well as potential mispricing of shares. Even venture capitalists and tech founders have long supported direct listing to be a more lucrative route to the stock market as compared to a traditional IPO.
Although this method is known to help in evading the need for investment bankers to endorse the offering, Wise has opted to take advice from banking behemoths such as Morgan Stanley and Goldman Sachs.
Wise was formerly known as TransferWise and was founded in 2010 by Kristo Käärmann and Taavet Hinrikus. It has been gaining significant momentum due to its innovative approach to cross-border transactions at the real exchange rate.
The company claims to have around 10 million customers that utilize its platform to transfer approximately USD 7 billion across borders every month. The U.K.-based fintech firm currently competes with popular organizations such as MoneyGram, Western Union, WorldRemit, and Revolut among others.
Wise’s debut could be a big win for London, which is currently trying to attract successful tech stories following Brexit. It could also be a critical test for the city considering it would be the first direct listing of a tech firm in London.
U.K. regulators have been reviewing proposals to relax London’s listings process in a bid to entice more tech firms to go public in the capital. This also reflects on the country’s growing financial technology sector, which has managed to create multibillion-dollar unicorns such as Checkout.com and Revolut.
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