Surge in value
Scottish Mortgage stake rockets in fintech’s IPO
Co-founders: Kristo Kaarmann and Taavet Hinrikus
Baillie Gifford’s Scottish Mortgage Trust has more than doubled the value of its holdings in Wise, one of Britain’s biggest fintech firms after its shares soared on its market debut.
Wise’s opening market capitalisation was more than double the £3.6bn valuation placed on the business in a fundraising 12 months ago.
Its flotation on Wednesday saw its market cap soar to £8bn, providing a boost to Scottish Mortgage, the £18.7bn investment trust, which had a 0.9% position at the end of May.
It was another triumph for Baillie Gifford manager James Anderson, who heads the Scottish Mortgage portfolio and supported the decision by Wise, formerly known as TransferWise, to opt for a controversial dual share class structure.
This gives the founders and early investors more control during the early stages of being a public company.
Schiehallion, another Baillie Gifford trust, also owns a stake, which accounted for 3.7% of its portfolio at the end of January, according to its annual results.
Some of the 2,000 employees in Wise will see their shareholdings worth six-figure sums, in what some see as a vindication of the employee-owner model.
It will see a major payday for Wise founders Kristo Kaarmann — a former consultant at PwC and Deloitte — and fellow Estonian Taavet Hinrikus, while also paying out big sums to its employee shareholders.
CEO and co-founder of Capdesk, Christian Gabriel said: “The 10% worker share could mean a £800m payday divided among some 2,000 staff.
“The Wise IPO will strengthen the business case for employee equity as a performance-driver and promises to be a huge boost for the wider UK and European tech ecosystem.”
It is the first example of a direct listing in London, heralding a new era for technology flotations on the LSE.
In direct listings companies do not create new shares or raise any fresh capital, avoiding the need to hire investment banks as underwriters.
It is also a boost for London’s efforts to become a major destination for technology listings following the Kalifa review.