Wise co-founder Hinrikus to step down as chair within a year

Taavet Hinrikus, co-founder of fintech start-up Wise, will step down as chair within a year as the company looks to strengthen its governance ahead of a high-profile direct listing on the London market.

Hinrikus will be replaced by David Wells, the former chief financial officer of Netflix, who has been a non-executive director at the money transfer specialist since 2019.

Wise, formerly known as TransferWise, revealed the plans in a prospectus published on Friday ahead of a direct listing on Wednesday. A direct listing means the company will join the London Stock Exchange without selling any new shares, in what is set to be a landmark event for the bourse.

The UK’s corporate governance code recommends that at least half the board of directors of public companies, including the chair, are classed as independent.

Wise said in the prospectus that although it would not be legally required to comply with the code, it “places great emphasis on the importance of strong corporate governance”, and expects to be fully compliant with it “over the short to medium term”.

It added that it would hire another independent director within six months of going public.

Hinrikus, who was the first employee at Skype, set up Wise with fellow Estonian Kristo Kaarmann in 2010. He served as chief executive between 2015 and 2017 before swapping with Kaarmann to become chair. 

He has become progressively less involved in the day-to-day running of the business since becoming chair, and instead has put an increasing focus on investing in other technology start-ups. Hinrikus owns 11 per cent of Wise’s shares, and half his stock will carry enhanced voting rights for five years after the listing. 

Kaarmann, who owns 19 per cent of the company, remains chief executive, and is the only shareholder who will receive enhanced voting rights on his entire holding.

Wise, which was valued at $5bn in a secondary share sale last year, will be the first technology company to complete a direct listing in the UK. It said the structure offers “a fairer, cheaper and more transparent way for us to broaden our ownership”.

The company’s decision to list in London after considering alternatives such as New York and Amsterdam is a boost for the UK government, which has been working to attract more high-growth companies to the London market.

Its efforts suffered a setback in March with the disastrous reception of Deliveroo’s high-profile initial public offering. Many British fund managers raised concerns about Deliveroo’s dual-class share structure, but Wise is hoping its broader structure — which gives enhanced voting rights to all existing shareholders — will be less concerning to investors.

Wise’s largest shareholders after the co-founders are US venture capital groups Valar Ventures, IA Ventures and Andreessen Horowitz, followed by Baillie Gifford, the Scottish fund manager and backer of several well-known tech groups.

The prospectus also offered more detail on a previously reported legal dispute between Wise and MS Bank, a Brazilian lender it previously worked with. Wise has accused MS Bank of withholding £6m that was used to provide liquidity for Wise’s money transfer business. MS Bank, meanwhile, has accused Wise of breaching tax requirements and “violations of exchange controls”.

Wise took a £6.7m provision for the lost cash in its most recent financial results but is pursuing damages from the bank. It said the financial impact of its claims and any counterclaims by MS Bank were not yet known, and added that it intended to co-operate with Brazilian authorities.