By Abhinav Ramnarayan and Thyagaraju Adinarayan
LONDON -Financial technology company Wise was valued at 7.95 billion pounds ($11 billion) on its market debut on Wednesday, making it the largest ever tech listing in London by market capitalisation.
The first direct listing on the London Stock Exchange could pave the way for other tech companies to follow, particularly as the initial valuations are well above the $6-$7 billion market expectations from earlier this year.
This strong result crowns a record-breaking year for London listings and could also encourage other fast-growing British firms in the financial technology sector, a dozen investors, entrepreneurs and experts told Reuters.
"It's a welcome start for Wise with a market cap of about 3 billion pounds over the private valuation from last year and the first half hour of trading has been pretty steady and quelled some concerns about volatility," said Susannah Streeter, an analyst at Hargreaves Lansdowne.
"It's hard to find a direct comparable to judge that valuation as the payments company is in a massive state of flux - but therein lies a risk for Wise: there will be a lot of competition nipping at their heels," she added.
The opening price of 800 pence was in line with an auction process in the preceding hours, which saw indicated price range between 750-820 pence. As of 11.15 GMT, the share was higher at 830 pence on volumes of 49.5 million.
FINTECH UNICORNS
The cross-border payments company, one of Britain's most well-known fintech unicorns, last month launched a direct listing on the London Stock Exchange, which allows for a listing without a public offering of shares.
Such listings have been growing in popularity among technology companies in the United States such as Coinbase, Roblox and Spotify.
"Wise has a distinct advantage over peers like Western Union and Moneygram because origination is 100% digital and they don’t have to maintain a network of physical locations to disburse cash," said Dan Thomas, an analyst at Third Bridge.
Wise does not actually wire money in the same way as peers, rather it holds balances in countries on popular currency routes to sidestep high fees, he said.
Several tech companies including Deliveroo, Trustpilot and Moonpig have already listed in London this year and helped push initial public offerings (IPO) to a record high.
The British government has been keen to attract technology groups to list in the country. The Financial Conduct Authority earlier this week outlined proposals to make it easier for them to list in London and help it compete with New York and the European Union following Brexit.
"It's definitely helpful to have well-known brands with strong success stories on domestic markets. They are few and far between so far, but the more that come to market the better," said Daniel Turgel, a partner in the M&A and corporate practice at White & Case.
($1 = 0.7242 pounds)
