Fintech-driven ambitions to revitalise City markets suffered a setback on Thursday, as money transfer company Wise abandoned its primary listing.
The London Stock Exchange faced another blow when the º£½ÇÊÓƵ fintech chose a dual listing across the Atlantic, with the US serving as its primary base, as reported by .
The Treasury and market officials had high hopes that a surge in fintech listings would boost the market, with Chancellor Rachel Reeves and City Minister Emma Reynolds actively courting prominent names to promote a London listing.
However, with prominent fintech companies like Monzo, Revolut, and Zilch rumoured to be preparing for a float, Wise's decision may foreshadow the market's future.
Treasury’s fintech hopes are waning
Claire Trachet, CEO of tech advisory firm Trachet, commented: "There was a moment when fintech was meant to be the crown jewel of London's IPO revival."
"But Wise's move makes it painfully clear that the spark the Treasury hoped for is flickering – and that º£½ÇÊÓƵ markets still aren't matching the needs of high-growth companies."
Wise stated that the transfer would help "significantly enhance [its] profile" and "closely align with major growth opportunities".
The company went public on the London market in 2021, with a valuation of £8.75 billion.
Despite earlier speculation about a potential FTSE 100 listing, chief executive Kristo Käärmann stated that the US presented "the biggest market opportunity in the world" and offered "better access to the world's deepest and most liquid capital market."
However, this is not the first instance of a fintech executive expressing a negative view of the London markets.
Revolut's chief executive Nik Storonsky described a London listing as "not rational" compared to the benefits of a US listing.
"If you look at trading in the º£½ÇÊÓƵ, you always pay a stamp duty tax which is 0.5 per cent. I just don't understand how the product which is being provided by the º£½ÇÊÓƵ can compete with the product provided by the US," Storonsky said on the 20VC podcast.
Treasury officials have been eager to dispel the notion that London cannot compete with New York, prioritising growth and deregulation.
Negative perception of City markets grows
Lee Holmes, chief executive of INFINOX, said Wise's decision "adds weight to a growing narrative that º£½ÇÊÓƵ and European public markets are struggling to retain, let alone attract, leading homegrown tech players."
The increasing number of companies leaving the London Stock Exchange, including tech firm Darktrace and Paddy Power owner Flutter, has soured market sentiment, and recent listings have done little to boost optimism.
In July 2023, fintech firm CAB Payments launched an initial public offering (IPO) on the LSE, debuting with a valuation of £851m.
A sharp decline of 70% in CAB's share price followed a profit warning and unfavourable market conditions in cross-border payments.
Rumours have been circulating about a potential £6bn listing for fintech favourite Monzo, after reports emerged that the neobank was consulting investment bankers.
However, Monzo's CEO, TS Anil, has consistently downplayed these hopes, stating that a public listing is "not a priority".
Despite the buzz in the City, uncertainty remains over where the digital bank will choose to list, with speculation that Anil is leaning towards a US IPO, while the board prefers to stay in London.
Fintech needs a reason to stay
In April, Reeves attempted to woo fintech leaders at Innovate Finance's global summit with her promise to make the º£½ÇÊÓƵ the best place to "start up, scale up and list."
However, the Chancellor's words have failed to convince companies of the appeal of the London market.
Trachet stated: "London still offers some of the strongest post-IPO trading conditions in the world."
"But founders are making trade-offs, and without a bold, unmissable signal from the government, fintech will increasingly treat the LSE as a second choice."
Deregulation efforts so far have included the abolition of the Payments System Regulator (PSR), but fintech firms may require more significant changes.
Tratchet said: "If we want fintech to anchor the future of the º£½ÇÊÓƵ economy, we need to give it a reason to stay. That means liquidity, visibility, and ambition."
The Treasury's first-ever Financial Services Growth Strategy is set to be unveiled on 15 July, with industry leaders keenly awaiting any government action.
Earlier this year, the Treasury held a summit with Innovate Finance's fintech unicorn council as part of its brainstorming for the forthcoming strategy.
According to Sky News sources, the fintech executives were asked to bring "armed with ideas about how to improve º£½ÇÊÓƵ competitiveness,".
With a wish list from the biggest players in the industry, the Treasury's upcoming strategy in July could be a pivotal moment.
Fintech leaders will be keeping a close eye out for tangible action – and the future of a revival of the London Stock Exchange may depend on it.
