British Fintech Wise IPO Creates 2 New Billionaires with $3.55 Billion
8th July 2021 | Hong Kong
British fintech and money transfer company Wise (formerly TransferWise), has IPO on London Stock Exchange (LSE) through a direct listing, creating 2 new billionaires in Estonian founders Taavet Hinrikus with $2.25 billion (18.8% of shares) and Kristo Käärmann with $1.3 billion (10.9% of shares). Wise shares opened at £8 and rise to 10% to £8.88 on Day 1 with market value of $12 billion (7/7/21). The direct listing was advised by Goldman Sachs and Morgan Stanley, saving costly IPO fees as Wise did not use underwriters for the IPO. (IPO ~ Initial Public Offering)
“ British Fintech Wise IPO Creates 2 New Billionaires with $3.55 Billion “
Wise Founded in 2010 by Estonians
Wise (formerly TransferWise) was founded in 2010 by Estonians Taavet Hinrikus and Kristo Käärmann, to make cross-border transactions at real-time exchange rate, competing with transfer giants such as Western Union.
In FY2021, Wise moved £54.4 billion across borders, for 6 million customers active in the financial year, representing a volume CAGR of 42% between FY2019 and FY2021. Revenues increased by a CAGR of 54% over the same period, reaching £421 million in FY2021. The company saw strong growth not just at a group level but also across all geographies it operates in and with both personal and business customers. Gross margins were stable at approximately 62% throughout this period. In FY2021, Adjusted EBITDA reached £109 million, a margin of 25.8%, while cash conversion8 was 95.6%. Profit before tax for the year more than doubled to £41 million compared to the prior year.
Wise became a public company through a direct listing in London on 7 July 2021. In contrast to a traditional IPO, a direct listing was the fairer, cheaper and more transparent way for us to broaden our ownership.
Wise IPO Creates 2 New Billionaires
The IPO also turned Estonian founders Taavet Hinrikus (18.8%, $2.25 billion) and Kristo Käärmann (10.9%, $1.3 billion) into billionaires.
The IPO Process
Wise direct listing was advised by Goldman Sachs and Morgan Stanley, saving costly IPO fees as Wise did not use underwriters for the IPO.
The IPO process is long and tedious for the company’s management team, and the IPO fee cost around 1% to 8% of funds raised in the process for hiring underwriters (investment banks, advisory firms), depending on deal size, terms, listing exchange.
There are also related IPO costs including legal team and auditors. Example, a $100 million capital raised at IPO means a fee of $2 million to $7 million payable to the underwriters.
IPO Fees – Alibaba, Facebook, Ant Group, Saudi Aramco
For Alibaba listing, the total fees paid was around $300 million for $25 billion raised, representing 1.2% of funds raised. For Facebook listing, the total fees was around $175 million for $16 billion raised, representing 1.1% of funds raised.
Should Ant Group listing in Hong Kong had gone through in late 2020, the total fees was estimated at $198 million for $17.24 billion funds raised, representing 1.1% of funds raised. (Ant Group was planning a dual listing, raising a total of $34.4 billion in Shanghai and Hong Kong)
For Saudi Aramco listing in early 2020, the total fees was around for $29.4 billion raised, representing 0.2% of funds raised.
Direct Listings
In 2020, popular music company Spotify became one of the highest profile company to go public via a direct listing. The company went public on the 3rd April 2020 on NYSE (New York Stock Exchange) without raising capital or selling new shares at $28 billion market capitlization.
The direct listing also allowed shareholders, including employees to sell their sales without any lock-in period that is usual for the traditional IPO process. For the listing, Spotify still hired Goldman Sachs and Morgan Stanley as advisors and Citadel Securities as designated market maker.
In December 2020, the United States Securities and Exchange Commission (SEC) have also approved direct listings on NYSE (New York Stock Exchange).
Other companies that have gone public recently, also without raising capital through direct listing are analytics company Palantir Technologies, gaming company Roblox Corp and cryptocurrency exchange Coinbase.
Billionaires:
- China Premium Tea Nayuki IPO in Hong Kong, Creates 2 New Billionaires with $1.1 Billion Each
- Didi Global IPO Creates 2 New Self-Made Billionaires, Founder Will Cheng Wei with $4.4 Billion
- Billionaire Warren Buffett Resigns from Bill and Melinda Gates Foundation, $49 Billion Endowment
- United States Billionaires Tax Leak, Top 25 Pays 3.4% in Tax Rate from $401 Billion Fortune
- Didi Chuxing IPO Creates 2 New Self-Made Billionaires, Founder Will Cheng Wei with $7 Billion
- Billionaires Bill Gates & Melinda Divorce, $150 Billion Assets
- Billionaire James Dyson Switches Residency Back to UK from Singapore
- South Korean Billionaire & Chairman of Kakao Kim Beom-Su to Give More than Half His $10 Billion Fortune Away
- Billionaire & Google co-Founder Sergey Brin Setup Family Office in Singapore
IPOs
- China Premium Tea Nayuki IPO in Hong Kong, Falls 13.5% on Day 1 with $3.8 Billion Value, 2 New Billionaires with $1.1 Billion Each
- Didi Global IPO on NYSE, Rises 1% on Day 1 with Market Value of $68 Billion
- Hong Kong Insurance Group FWD Files for US IPO in United States, Valuation Around $13 Billion
- Didi Chuxing IPO Creates 2 New Self-Made Billionaires, Founder Will Cheng Wei with $7 Billion
- China Didi Chuxing Files for IPO in United States, Valuation at $100 Billion
- Grab $39.6 Billion SPAC IPO Delayed to Q4 2021, Pending Accounts Clearance
- JD Logistics IPO in Hong Kong, 3.3% Higher on Day 1 with $32 Billion Market Value
- Indonesia Tech Giants Gojek and Tokopedia Merge to Form GoTo Group, Eyes $35 Billion Future IPO
- UK-Based Deliveroo IPO on London Stock Exchange, Down 26.4% on 1st Day
- Baidu IPO on Hong Kong Exchange, Price Remains Unchanged on Day 1
- South Korea E-Commerce Giant Coupang IPO on NYSE, Rises 41% on Day 1
- Kuaishou IPO Rises 160% on Day 1, Raised $5.32 Billion
- Airbnb IPO Rises 112% on Day 1, Raised $3.5 billion
- DoorDash IPO Rises 85% on Day 1, Raised $3.3 billion
- JD Health IPO Rises 55% on Day 1, Raised $3.4 billion
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