Wise’s Move to the US: A Sign of Changing Times for UK Tech Firms

Wise, the well-known money transfer fintech, has announced its plans to switch its primary stock market listing from London to New York. This move signifies a pivotal shift in the landscape of UK tech companies, reflecting broader trends about where startups are choosing to list and seek investment.

A Shift in Listing Strategy

Founded in 2014 by Estonians Kristo Käärmann and Taavet Hinrikus, Wise has been listed on the London Stock Exchange (LSE) since 2021. However, as of today, the company plans to change its primary listing to the US. This announcement is particularly significant for the London market, which has faced criticism for not being as liquid or attractive for high-growth tech firms as its US counterpart.

The decision is underpinned by a desire to broaden Wise’s investor base, taking advantage of the substantial financial resources available in the US. According to Wise, this shift will enhance its visibility among American institutional and retail investors—who make up a considerable portion of the global investment landscape.

Boosting Investor Access

Wise’s executives are optimistic that the relocation will significantly broaden the pool of investors interested in the company. In a statement, Käärmann emphasized the need to engage with the US market, which he described as the "biggest market opportunity" for Wise’s products. He articulated that accessing the "world’s deepest and most liquid capital market" is crucial for Wise’s growth trajectory.

The fintech aims to ensure that even with this primary listing change, it will still maintain a secondary listing in the UK. This dual strategy aims to reassure UK-based shareholders of Wise’s commitment to its roots while also capitalizing on opportunities across the Atlantic.

The Broader Trend: UK Firms Looking Westward

Wise’s decision mirrors a growing trend among UK firms, particularly in the fintech sector, to list in the US. With well-known figures like Nik Storonsky, CEO of Revolut, advocating for US listings due to perceived inefficiencies in the UK market, the question arises: are UK startups ready to abandon their home turf?

Experts like Claire Trachet, CEO of a tech business advisory firm, argue that firms are now prioritizing where to list based on which market will best support their growth phase, rather than sticking to their country of origin. This moment signals a potential turning point for UK startups, emphasizing the necessity of accessing US liquidity to fuel global ambitions.

Impact on the London Stock Exchange

The ramifications of Wise’s move extend beyond just one company. Commentators like Philip Salter, founder of The Entrepreneurs Network, view this as a critical wake-up call for the LSE to enhance its late-stage funding options. The push to maintain competitiveness with US markets has never been more urgent.

Salter notes that although Wise’s dual listing retains ties to the UK, the primary US anchor serves as a clear reminder of the challenges facing the UK’s investment ecosystem. Enhanced late-stage funding coverage will be essential if the UK seeks to cultivate its next wave of scalable startups.

The Future for UK Tech

Despite Wise’s notable decision to shift its primary listing, there remains a resilient cohort of UK tech firms, such as Zopa and Monzo, that aspire to remain in the UK market, provided the right conditions exist. Trachet highlights that a cohesive vision between the public and private sectors is crucial for nurturing this ambition.

Matt Cooper, Co-CEO at Crowdcube, also reiterates the difficulties the LSE faces, emphasizing how Wise’s move is symptomatic of a broader exodus of companies looking for more favorable listing environments. With the Private Offer Platform (POP) reform on the horizon, there is still potential for the UK to lead in innovation and attract capital.

Conclusion

Wise’s transition to a US primary listing underscores a significant trend in global finance, indicating that tech firms are prioritizing market dynamics over national allegiance. As the landscape continues to evolve, the LSE will need to adapt and innovate to retain its standing as a premier venue for tech listings. The shifts underway in the UK tech ecosystem serve as a reminder of the need for continuous adaptation in a rapidly changing world.