Wise is entering the US market. Why would a fintech company do this?

British fintech company Wise said it is going public on the U.S. exchange Nasdaq, expecting to attract more investors and increase the liquidity of its shares through a placement on the largest stock market - in the U.S., notes Bloomberg.

According to regulatory filings, the company's shares will trade on Nasdaq under the ticker WSE. The company will also re-list its shares on the London Stock Exchange as a secondary offering.

The company's reorganization and completion of its Nasdaq listing is expected on or around Ma 11, Wise documents show.

Wise shares added 1.6% at the trading in London on May 11. Since the beginning of the year, they are up 20.8%. Since going public in July 2021, Wise's shares in London are up about 33% as of Ma. 8. However, the company's securities have never been included in the U.K.'s main stock index, the FTSE 100 - mainly because of its two-class share structure, Bloomberg notes.

According to Wise CEO Christo Kaarmann, the dual listing should, among other things, increase the liquidity of the shares. The move is also linked to the company's plans to expand its business in the U.S., including through its Wise Platform division, which provides banks with infrastructure for foreign exchange transactions. According to Kaarmann, one of the fintech company's biggest clients is Morgan Stanley. Wise is also in talks with other U.S. banks, the head of the company said in an interview with Bloomberg.

"We can start trading in the morning in London and then continue in the afternoon in New York - that's one of the meanings of dual listing. In addition, we are reaching a new audience of U.S. shareholders and analysts, and that gives us an opportunity to reintroduce the company to the market," Kaarmann said.

He said large institutional investors, including billionaire Peter Till, Silicon Valley venture capital fund Andreessen Horowitz and British investment firm Baillie Gifford, had shown interest in Wise shares on the London Stock Exchange since 2021 but had been unable to buy them due to lack of liquidity.

While the liquidity of the stock has increased since Wise's IPO five years ago, "it's still not even close to the liquidity of Wise's U.S. competitors," Kaarmann said.

Listing on Nasdaq will also allow Wise to retain a two-class share structure, which is more common in the U.S. than in the U.K., Bloomberg notes. Such a system gives CEO Christo Kaarmann key voting control in the company. In London, that structure was set to expire this year, and it was the system that caused controversy among some of the company's shareholders over corporate governance issues. However, in the end, moving Wise's main listing to the U.S. found support among stakeholders, the agency points out.

However, Wise will not be immediately eligible for inclusion in major U.S. indices, including the S&P 500, because its holding structure is incorporated on the island of Jersey. To qualify for inclusion in such indices (it could attract significant investment from funds that follow these benchmarks), Wise would have to prove that it is in fact a U.S. company - for example, through a significant share of revenue, shareholders and management in the U.S., Bloomberg explains.

This article was AI-translated and verified by a human editor