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Wise, the London-listed fintech group, has taken some time to grow into its name. Since its 2021 direct listing, it has had a rollercoaster ride of interest rate shocks and regulatory mis-steps. But the company now has an £11.2bn market capitalisation, well above where it went public — and a grown-up business model to go with it.
A 36 per cent rise in four years may not sound like much, but it is far better than most of its counterparts that went public during the pandemic-era boom. Companies that listed in the US between 2020 and 2021 are on average 35 per cent below their initial price, according to a Lex analysis of Dealogic data; the average UK listing is down almost 50 per cent.
Unusually, in a world where many fintechs try to become “super apps” that encompass customers’ entire financial lives, Wise has stuck close to the international payments business it started with in 2011. Cross-border transfers for consumers and businesses make up about two-thirds of underlying revenue, the remainder coming from sources such as fees from multi-currency debit cards, and interest earned on customer balances.
It has been a sagacious approach: annual cross-border volumes processed by Wise have almost tripled since listing to about £145bn. And Barclays estimates that about 83 per cent of the market is still controlled by traditional banks, leaving plenty of space to build share even before factoring in any structural growth.
Progress has been slower in its so-called Platform business, which involves white-labelling the company’s payment networks for established banks. Recent agreements with Morgan Stanley and Standard Chartered are encouraging, but building momentum will rely on avoiding any more doubts over its anti-money laundering and financial crime systems.
Even without a step-change in the platform business, however, Wise may receive a boost from a change in its listing status. Its board has been debating whether to make changes to its articles of association that would allow it to enter the FTSE 100.
The outcome has not been announced yet, but Wise — which reports full-year results next week — has said a decision is imminent. Choosing not to encourage an influx of new investors would be bizarre.
At its previous share price peak — slightly above where the shares are at present — Wise was valued at more than 70 times forecast year-ahead earnings, according to Bloomberg data. At its current level of 27 times expected earnings the valuation looks a lot less reckless. Sometimes, being the adult in the fintech room — or at least a sensible adolescent — pays off.
nicholas.megaw@ft.com
