The corporate path taken by a leading money transfer app called Wise exports a famously American strategy across the Atlantic.
The U.K. company, formerly known as TransferWise, has gone public through a direct listing on the London Stock Exchange.
The new LSE entrant is valued at 8 billion Pounds, or around $11 billion, and used the direct listing route to get onto the exchange without some of the traditional paperwork of a regular IPO.
Although this is the first instance of the direct listing being used in the United Kingdom, American firms have been adopting this approach lately, including Spotify, Slack, and Roblox. Another notable adopter of the direct listing is Coinbase, which went public a couple of months ago, expanding its presence in the blockchain sector.
Why do companies choose a direct listing? Proponents hail the process as being cheaper, simpler and more transparent than a normal IPO.
On the downside, though, there’s not always the same process of building financial support.
“Not as much interest is drummed up, and there is no guarantee for share sales as it relies purely on supply and demand,” said Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, as quoted by Sophie Mellor in coverage at Fortune.
As for the company’s business model, Wise provides different kinds of money transfer alternatives in an age where decentralized finance and the blockchain are driving innovation in finance at a rapid clip.
“Banks and money transfer providers often give you a bad exchange rate to make extra profits,” write company spokespersons in a Wise blog. “Wise is different. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. Which means you can save up to 8x by using Wise rather than your bank when you send your money abroad.”
Look for LSE’s Wise to make waves in the fintech sector.
