Digital-payments provider Wise wants to go public on the London Stock Exchange via a direct listing, the first major technology company to choose that alternative route to the market in the U.K.
The company is also giving its founders and employees extra voting rights for their shares for a limited time, allowing them to retain control after going public, Wise said in a statement Thursday. The deal could value the company at more than 5 billion pounds ($7 billion), Sky News reported, citing unidentified people familiar with the matter.
In a direct listing, a company doesn’t raise fresh capital and existing investors can sell shares on the open market, without the usual lockup-period restrictions of a traditional initial public offering. While the approach saves on underwriting fees and time spent on the bookbuilding process, there’s a higher risk of volatility because banks don’t stand by to stabilize the stock as they do in IPOs.
The novel approach will need to win over investors, given that many of them tend to be creatures of habit, said Alex Game, a fund manager at Unicorn Asset Management in London.
Looking for weekly M&A news updates?
TransactionWatch is a weekly newsletter covering the most important and relevant merchant acquiring M&A activity. This first-of-its-kind newsletter was developed for the world’s cutting-edge payments executives. See an example edition.
How Do I Sign Up?
Click here to visit the TransactionWatch landing page and complete the subscription form. You will receive a confirmation email and begin to receive TransactionWatch every Friday.