Hargreaves Lansdown: A £8 Billion WISE Way to Start a Listed Era

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, reports research about an £8 billion WISE way to start a listed era: ‘’WISE may have flown into the stock market blindfold, given that by choosing a direct listing, its share price wasn’t decided in advance, but the payments firm has had a smooth landing, with shares rising since trading began.’’

There were 47 million trades in the first half-hour, pushing the price up by 3% from the opening auction price of 800p (total trades, not trades just through HL). Shares came out of auction at 820p before dropping slightly and then rebounding to 825p by midday. The launch has put a value of the company of around £8 billion, a big step up from the £5 billion price tag attached to the company by private investors last July.

The unruffled start to trading should help London’s efforts to maintain its reputation as a FinTech hub as it has struggled to attract fast-growing companies keen to list. The UK has gone out of floatation fashion with just 5% of companies delivering an IPO choosing London as the launch pad. This particularly worrying because we see IPOs as an opportunity to bring more people to investing for the first time

But now more firms might see direct listings as a good alternative to traditional IPOs which are more costly, needing the input of expensive services from investment banks.

Direct listings are more of a level playing field for all investors. Instead of institutional investors usually being given first dibs, retail investors get an equal bite of the cherry.

More direct listings would be a welcome development given that retail investors have been excluded from 97% of IPOs since 2017.

WISE has made a feature of bucking tradition and disrupting systems ever since it launched in 2011 as Transfer Wise. It now boasts 10 million customers worldwide and has been profitable for the last four years. It’s expanded from a personal peer-to-peer service to offer businesses faster payments solutions and that is an attractive feature of its growth prospects.

But there are plenty of risks ahead: the company has rivals snapping at its heels in the revolutionary world of payments and to stay competitive it may be forced to cut fees faster than it can reduce costs. It has also noted that excessive volatility in currency markets could also affect its profits.’’