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Blink and you missed it. The UK’s biggest tech flotation happened on Wednesday to about a hundredth of the pre-publicity generated by the over-hyped and under-cooked Deliveroo.
Wise, formerly Transferwise, is a low-fee processor of cross-border payments and very successful – pre-tax profit doubled last year to £41m and the business is still grabbing share from sleepy banks. The reason for the relative lack of fanfare was Wise’s novel approach to joining the stock market: a direct listing in which the shares simply start trading after a three-hour auction to get the show rolling.
Wise wasn’t raising money, thus there was no need for new equity to be priced beforehand and no sure guide to what the company would be worth. It finished its first day in public form at £8.75bn, more than twice its valuation in its last private funding round last year. If Wise were eligible for inclusion in the FTSE 100 index, it would slot into a place above aero engine maker Rolls-Royce, a different sort of tech business.
It is ineligible because Kristo Käärmann, chief executive and co-founder, insisted on giving himself enhanced voting rights, which is a no-no for a so-called “premium” listing (and thus index inclusion) until the Financial Conduct Authority changes the rules, the controversial course on which the regulator seems set. Käärmann gets a boo from governance purists for the dual-class structure but, since his 19% stake is now worth £1.65bn, he probably doesn’t care.
He gets a cheer, though, for demonstrating that appetite for high-growth, highly prized tech businesses is alive and well in London, and that Deliveroo’s float flop was not a reason for general angst. Tech comes in many forms. Wise’s valuation looks punchy but, as always seemed likely, the stock market is capable of distinguishing between a proven payments operation that moved £54bn across borders last year and a loss-making food delivery app.
Renishaw’s sellers’ principles cost them dear
It’s a tricky business, this hunt for “responsible” buyers of companies. Back in March, Sir David McMurtry and John Deer, founders of Renishaw, a quietly impressive maker of ultra-precise measuring devices, declared that, having reached their 80s, they wanted to sell up.
Since they own 52% of Renishaw between them, that meant the £4bn Gloucestershire-based company was on the block. But there was an important condition. Would-be owners would have to respect “the unique heritage and culture of the business, its commitment to the local communities in which its operations are based”.
That clause always looked a high hurdle to clear (certainly higher than the board of Morrisons, say, might insist upon). So it has proved. Four months later, the sale process has been abandoned without a deal.
McMurtry says he and Deer “enjoy good health” and have no intention of selling their shares on the open market “for the foreseeable future”. What they haven’t got, though, is a long-term plan. Gift the shares to a trust? It’s an idea, but 52% is an awkward size – the other 48% of shareholders also have rights.
Renishaw’s share price rose from £58 to £70 on the March announcement but is now at £50 as no suitable suitors have emerged. That is less than ideal for everybody. McMurtry and Deer deserve huge credit for sticking to their principles, but it’s not obvious how they will solve their conundrum.
Shell’s dividend policy is a headscratcher
Another day, another dividend policy from Shell. That’s about three since the oil company cut distributions by two-thirds when the pandemic took down the oil price.
A barrel of Brent is now back above $70, defying predictions it would be sub-$50 into the middle distance, and Shell thinks it can afford to be more generous to shareholders. Payments, either through dividends or share buybacks, will be lifted to between 20% of 30% of free cash flow.
Shell called it a case of moving to “the next phase of its capital allocation framework”, but the frame itself seems to have re-set. The company will “retire” what it called “a net debt milestone of $65bn”. Nobody can grumble about the inability to predict a wild oil price, but Shell seems to be making policy on the hoof.
If it’s all intended to display confidence in the long-term returns that can be earned via low-carbon investments, that’s a good thing. But it’s hard to tell.
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