Portfolio: Why did you decide to list Wise?
Kristo Käärmann: Since 2011, our mission has been to make the movement of money without borders possible – immediate, convenient, transparent and sooner or later free of charge. You don’t need a listed company to move forward with this mission. However, as we grow, we need to increase our ownership base and the capital markets provide the right infrastructure for this. Thanks to this introduction, we can add new shareholders to the team. This also means that our customers can even become owners of Wise at the same time. Personally, the latter excites me the most.
We will be the first tech company to go public on the London Stock Exchange. This will not be a traditional IPO.
We’ve been profitable for 5 years now, so we don’t need any more money; usually this is what companies want to achieve through an IPO.
Why do you think direct listing will work better for Wise than an IPO? Why did you choose this form of introduction?
Kristo Käärmann: We believe direct implementation is the right approach for Wise and our customers.
First, direct introduction is much fairer. Everyone has the same opportunity to acquire a stake in Wise as large institutions.
Second, it is transparent. Volunteer buyers and volunteer sellers are doing the market, which will result in a real market price. There are no behind-the-scenes pricing like we can see at a traditional IPO.
Last but not least, it is effective. Thanks to the direct introduction, we can move much faster. It’s also cheaper, so we can focus on building products and solving our customers ’problems.
We can only do this this way because we do not need fresh capital. We have been working hard over the past decade to build a sustainable business. We are profitable, growing and have a distributed ownership base. It is both a privilege and a sign of strength.
Why, for example, was the LSE chosen over the NYSE, for example? When can trading on the London Stock Exchange begin?
Kristo Käärmann: We are an international team, but our largest team is in Europe – in Budapest, Tallinn, London. Wise started in London. This is where Taavet, our co-founder, first experienced the frustrations of sending money, not to mention the hidden costs. Our 500 people work in the London office, so it was a logical decision for us to be listed on the London Stock Exchange.
Trading will begin on July 7th. For us, the stock market is a place to access international capital markets. London is an excellent boarding house. Europe will be a fantastic place for the tech sector and a platform where companies can grow and thrive and our products are used by knowledgeable investors.
If all is true, they plan to go public in a dual-class stock structure. Why did you choose this form of introduction? How can Wise customers become investors at the same time?
Kristo Käärmann: Our long-term mission is to be able to move money without borders and a commitment to our customers is at the heart of all our decisions. While IPO is an appropriate step for us, giving up our long-term mission would not be.
Therefore, we agreed with the Board of Directors and the owners to choose a broad-based, dual-class share structure available for a limited time. We have offered temporarily available shares with increased voting rights to all existing investors, including employees. This structure will help us to be able to focus on our mission as we move to public markets without losing focus on short-term goals. We will be able to work the same way we have done in the last 10 years; thanks to this method we got to where we got down.
But most importantly, we want to offer our customers to be owners of Wise as well.
Our customers have the best understanding of the problems we want to solve. We see it natural that they should be given the opportunity to have a say in building and managing Wise. In order to support customers becoming Wise owners, we want to launch a customer-shareholder program that will be called OwnWise. With OwnWise, customers who invest in our mission can also access extra rewards, even to receive £ 100 extra shares, or attend our Mission Days event.
In July 2020, the company was valued at $ 5 billion after a round of funding. In April this year, Reuters wrote that the company could be worth $ 6-7 billion. What value do you want to achieve with the listing?
Kristo Käärmann: We cannot comment on any speculation. Unlike a traditional IPO, there will be no pre-determined price range. On the first day of trading, the market will decide what the exchange rate will be.
What are the key management objectives for the coming years?
Kristo Käärmann: We want to make international cash flow available everywhere. The infrastructure we have built will help with that. In order to deepen this, we will need central banks and supervisors that think in a way that is as innovative for non-bank players as the Magyar Nemzeti Bank. Last year, thanks to the MNB’s openness to financial innovation, we were able to integrate into our system the direct access system permitted by EU legislation. Our goal is to take this step now everywhere else. Thanks to this, we will be able to scale our company and also reduce our costs and customer fees.
Are you planning to get a banking license in the coming years?
Kristo Käärmann: We have no such plans. Our clients do not require the lending service and we do not think that we should lend to them. We are building products that solve their problems in a new category – this is international banking. Banks tend to benefit more domestically, and we see that we can solve international problems primarily.
Are you planning to appear in newer countries or launch new products?
Kristo Käärmann: Globally, every 40 pounds that customers send to another country flows through the Wise system.
This means that our market share is currently 2.5% in the international payments market.
Our volume has grown by 54% in the last two years.
We also want to increase these volumes by deepening our infrastructure and removing regulatory barriers so that we can offer our services in as many countries as possible. For example, we recently started sending money in India and allowed our customers to have a Canadian bank account service so they can accept money as if they were locals.
However, we cannot do all this alone, we need many other people to join our mission. That’s why we’re growing our team in Budapest and looking for more than 100 more people to join Wise’s more than 400 local team by the end of the year.
Come and join one of the best and smartest teams in town!
Cover image: Kristo Käärmann, co-founder and CEO of Wise. Photo: Wise
Source: Portfolio.hu – Üzlet by www.portfolio.hu.
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