Wise

Extract from Portfolio Manager Commentaries – Sept 2022

Wise is a UK-based business with a current focus on remittances. The business IPO’d in July 2021, not raising capital as they were already profitable. They have built extensive global infrastructure to lower the cost of international transfers, which is superior in cost (between 50%-80% lower than the traditional banking system) and speed (83% of transfers happen in less than a day versus overseas bank transfers normally taking two to five working days). The business has a core philosophy to reinvest any scale benefits back into the business to drive costs lower, which drives customer loyalty and ignites a flywheel. They have a roadmap to expand beyond remittances over time and are currently benefitting from rising rates as customers leave money in their Wise accounts with them earning a spread, but then reinvesting the bulk of this into the business to expand their feature set and overall customer proposition. The business is growing more than 50%, whilst generating positive FCF (free cash flow) and whilst the near-term FCF multiple is elevated at 27 times, this derates quickly to 14 times in early 2026 based on our estimates.