Wise’s direct listing ‘a great outcome’ for the London IPO market
The money transfer firm decided to list its shares directly on the London Stock Exchange via a rare listing method which was executed by Spotify in the United States back in 2018.
Wise, formerly known as TransferWise, saw its shares open at 800p during early morning trading, giving the company a market value of £8.75 billion, or $12 billion - that’s more than double its $5 billion valuation in a previous fundraising undertaken back in July 2020.
By the close of trading, the company’s share price was up 10%, lifting the firm’s valuation to £8.8bn. City analysts had previously forecast a valuation for the company of around £7bn.
Commenting on the record listing, Tom Johnson, Barclays’ Head of Equity Capital Markets for Europe, the Middle East and Africa said: “Wise’s successful direct listing is a great outcome for the London market. We need to see innovation of this kind to put London on the front foot.”
According to the Financial Times, Wise is one of the first of a wave of UK fintechs founded in the wake of the 2008 financial crisis to go public and it has already reported several consecutive years of profitability. The group, which has about 2,200 employees, made a pre-tax profit of £41m in the 12 months to March 31, on revenues of £421m, the FT reported.
Wise’s listing follows a series of huge IPOs undertaken this year. In fact, more money has been raised by newly listed firms in 2021 than was managed across all of 2018 and 2019.
According to new research from Pinsent Masons, the UK IPO market has seen more companies listed in the first half of 2021 than the entirety of 2020. In fact, by the end of June 2021, 45 companies have listed with a further six having announced their intention to float. In contrast to the 31 companies across the full year 2020, this figure indicates a rise of 45%.
Cyber security firm Darktrace, which floated its shares back in April 2021, stands at almost twice its original value today, having initially been valued at £1.7 billion, or 250p a share.
The 1H21 period has also included some disappointing IPOs, including the food delivery app, Deliveroo, which failed to deliver on its pre-IPO predictions. Its 390p a share starting price is now down to 270p after what some analysts have described as ‘the worst IPO in history.’
Strong investor appetite has also seen the biggest flotation on AIM this year in online bathroom accessories business, Victorian Plumbing. Its £850m market capitalisation upon admission makes the business the largest company ever to list on London’s AIM market.
Liverpool-based Victorian Plumbing, which was founded back in 2000, is one of the UK’s largest online participants for bathroom products and accessories. Since the onset of the COVID-19 pandemic last year, the business has seen a huge rise in demand for its product portfolio.
More big technology stocks are expected to follow in Wise’s footsteps going into 2H21, including DNA sequencing business Oxford Nanopore. To date, analysts have predicted that the former University of Oxford spin-off could reach a valuation of between £4bn and £7bn.
Julian Stanier, Head of Corporate finance at Pinsent Mason, has described the first half of 2021 as "the busiest period for London Stock Exchange IPOs for about 15 years". At the same time, however, the corporate head has warned of "indigestion" following the rush.
He explained: "Not every company that is queuing up will achieve a listing; investor appetite has remained strong in H1 but we are beginning to see some signs of indigestion. "We are hearing stories that fund managers are fatigued and tired of so many roadshow meetings. With the much-anticipated end of lockdown a few weeks away and summer holidays around the corner, there is likely to be a sharp decline in activity in the weeks to come.”
"The race is still on to get IPOs completed before this summer lull. After that we have a healthy pipeline of IPOs scheduled from September with a number of issuers keen to be straight out of the blocks post the summer break. However, we will have to wait and see if investor appetite continues at the same levels post the summer break,” Stainer added.
“The success of Wise’s debut will be a good litmus test to gauge the appetite for direct listings here in the U.K.,” said Manish Madhvani, Managing Partner of investment firm GP Bullhound LLP.
Follow News & Updates from Wise here:
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.