Wise goes to the US. Will its founder’s supercharged voting rights follow? | Nils Pratley
Back in 2021, the arrival on the London stock market of Wise, a rapidly expanding money transfer company, generated a feelgood factor at a useful moment,It came a month after overhyped Deliveroo flopped on debut,And, since Wise was a pure fintech business, as opposed to a pizza delivery outfit with an app, there was reason to think the UK might be getting its act together in the sector that politicians swoon over,Shoreditch’s finest, and its Estonian founders, would show the way in UK fintech,Wise sported a £9bn valuation.
Now the company wants to switch its primary listing to New York in search of a wider pool of investors, more active trading in its shares and “a potential pathway to inclusion in major US [stock market] indices”.A secondary listing will be retained in London, but we know what usually happens.Nine-tenths of the share trading gravitates to the primary location.The obligatory description on these occasions – “a fresh blow for London” – applies.Wise, with revenues of £1.
2bn and underlying pre-tax profits of £282m, is a bad one to see succumb to the temptations of New York.Rachel Reeves may take note.The chancellor is cajoling UK pension funds to shove cash into private markets (at a moment when even private equity insiders worry that the golden years for returns could be over) but it is the public markets that are more in need of love and affection from No 11.She won’t do it (almost certainly), but the first step would be to cut the UK’s uncompetitive 0.5% rate of stamp duty on share purchases.
There is plenty of evidence that a reduction would pay for itself in increased trading.Yet let’s not overlook a weirdness about Wise’s move – and an unanswered question.The oddness is that the company, now so keen on getting into a US index, never tried to enter a UK one.At flotation, its dual-class share structure meant it could not be included in FTSE indices.Why not now join the grown-ups? With a £12bn valuation these days, Wise would rank halfway up the Footsie.
It would be a big fish,The danger in having the main listing in New York is that the firm will be a relative minnow in a tech pond populated by the trillion-dollar likes of Nvidia,But that’s a risk its founder, Kristo Käärmann, is clearly prepared to take in pursuit of greater US visibility for “major US growth opportunities”,Or perhaps the dual voting structure is a bigger part of the story,Wise’s statement described the US listing as having “a structure that aligns with US market practices including those of our US-listed tech peers, which we believe allows us to remain laser-focused on delivering our mission”.
That sounds suspiciously like a reference to the enhanced voting rights that now allow Käärmann to own 18% of the shares but have 50% of the votes,Such unequal arrangements cause little fuss in the US, but they remain controversial in the UK, even if they are now allowed for index-inclusion purposes after a change in the rules a couple of years ago,A key point about Käärmann’s supercharged rights, however, is that they are due to expire next summer under a “sunset clause” agreed at listing,Wise could, if it wished, ask its UK shareholders for an extension but that may cause a row in itself – a sunset is meant to mean what it says,Perhaps the company thinks it is easier to wrap continued enhanced rights into a package where the main element is the change of main listing.
Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionKäärmann offered zero clarity on whether he wants to keep his supercharged rights.“It depends on the structure we are going to land on,” he said, adding that all would be clear in the formal circular later this month.Curious.London’s acceptance of dual rights – but, critically, only with a five-year sunset clause – was meant to be a way to entice UK tech founders to list in London.It was a pointless change if it just encourages them to leave when the sun is about to set.
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