Latest news with #KristoKaarmann
Daily Mail
2 days ago
- Business
- Daily Mail
Shareholder revolt over Wise plans to move listing to New York
Wise faces a shareholder revolt today over its plan to move its primary listing to New York – after a falling out between its founders. Taavet Hinrikus – one of the fintech firm's founders – has urged investors to vote against the move on the grounds of concerns about shareholder rights that are tied up with the proposal. Wise's planned departure has been described as a 'hammer blow' to the City and will make it the latest in a string of UK-listed companies upping sticks for the US. Wise has said shareholders are 'overwhelmingly in favour' of the plans. A shareholder meeting to rubber stamp the move will be held today. Wise is led by boss Kristo Kaarmann, who founded it with Hinrikus, a fellow Estonian, in 2011. Hinrikus has since left the company but still owns a 5.1 per cent stake via his firm Skaala Investments.
Times
6 days ago
- Business
- Times
Wise founders' row puts dual-voting structures in the spotlight
When two billionaires fall out over a fundamental principle, you can expect a certain amount of argy-bargy. So it transpired this week as the co-founders of Wise, the £10 billion London-listed cross-border payments platform, came to blows. Taavet Hinrikus went public to berate his erstwhile friend, business partner and fellow Estonian Kristo Kaarmann over a plan to extend his near-stranglehold over the company and, in Hinrikus's view, to tighten it still further. In a stinging letter, he rebuked his co-founder for risking reputational damage to the company by proposing to extend a dual-class share system by another ten years. Wise had previously promised to dismantle the system, which gives Kaarmann 55 per cent of the voting shares, and bring in a more democratic approach by June 2026 at the latest. • Wise founders fight over two-tier share structure Not only was Kaarmann entrenching 'rule by the few', he was also sneaking the reform through in an underhand way by 'bundling' it in with a different proposal to switch the company's primary listing from London to New York, argued Hinrikus, who left the business shortly after it listed in 2021 but still owns an 11.8 per cent voting stake. The enfranchisement proposals were not even mentioned in the official announcement about the listing move and were 'buried' in an accompanying 94-page circular, he said. So was another tweak to the arrangements which would compound Kaarmann's dominance still further by reducing the majority threshold on future votes. 'Wise owners deserve governance structures that enhance value, not entrench power,' was Hinrikus's barbed sign-off line. Wise and Kaarmann, who is chief executive, have hit back, insisting that they have been transparent and that extending the dual-class structure was 'essential to ensuring our continued successful performance and safeguarding our focus on executing our strategy'. • Wise to incorporate in Jersey ahead of US listing The row over voting rights has overshadowed a different concern over Wise's transatlantic flit, a move already seen as a blow to the City of London's reputation as a nurturing jurisdiction. For Wise is that rare thing in Britain: a large tech-driven disrupter, loved by its clients, expanding fabulously fast and already spectacularly profitable. Hinrikus has a point. There seems no insuperable reason why the US switch and the dual-class share proposal shouldn't be unbundled so that shareholders can make separate decisions on each. They are very different matters deserving of different votes. Yet the arrangement makes it look as though Kaarmann is using the sweetener of the primary listing change to steamroll through a personal power grab. The haste to get the proposal done and the failure even to mention the dual structure in the initial regulatory news announcement hints at a board rather embarrassed about all this and hoping no one will notice. That haste has led to confusion. Wise has been wrongly claiming the support of at least one proxy voting agency, PIRC, which had completely changed its verdict on the proposal after seeing the full details and is now emphatically recommending that Wise shareholders vote against. Glass Lewis has also modified its position after learning all the details. There is no explanation as to why a company that set a five-year limit on the dual-share structure at the time of its listing in 2021 now thinks a total of 15 years is necessary. Most so-called sunset clauses in founder-led flotations are for five to seven years. Dual-voting structures divide opinion. Allowing founders to maintain control gives them the confidence to make long-term decisions and not be distracted by the need to generate smooth quarterly earnings progress of the kind unhelpfully expected by some outside shareholders. On the other hand, they can entrench power. Unsackable bosses are not immune from making strategic blunders, while their companies could sometimes benefit from unwanted takeover bids or activist pressure. Private fiefdoms can work well for a while but ultimately get complacent and need outside challenge. There is much to be said for the simpler philosophy of 'one share one vote'. • Wise value tumbles after revenue growth slows and profit dips Ever since Sergey Brin and Larry Page floated Google (now Alphabet) in 2004 and claimed it as a virtue that their shares carried ten times as many votes as anyone else's, the doctrine of special privileges for founders has prevailed, especially in tech companies. No one could complain they weren't warned. 'Google is not a conventional company and we do not intend to become one,' proclaimed Brin and Page, who have long since stepped down but still control the votes. And investors have of course done exceptionally well, making 63 times their money Research on dual and multi-share structures is patchy and ambiguous. One of the more credible global studies, by academics at the University of Virginia, found that there was no meaningful difference in either total shareholder return or return on invested capital between listed companies with multi-share structures and those more democratically structured. The pendulum towards founder-favourable terms shifted even further in the UK with recent reforms to the listing rules that allow dual-class structures and do away with the need for independent shareholder votes on related-party transactions. • Wise investor 'unhappy' over listing move from London to New York Some mainstream investment institutions in the UK believe it has gone too far, on Monday launching a new lobbying strategy, the Governance for Growth Initiative, to fight a rearguard action for shareholder rights. Wise owes its remarkable success to what it used to call 'radical transparency' — its clear explanation of the fees charged to its customers. This, it was able to boast, was in sharp contrast to the obfuscation and impenetrable fine print of the high street banks. With this proposal, it is in danger of the very same sin itself. It claims 'overwhelming support' from its shareholders but this may have been before they understood exactly the concession they were being asked to make. It is not quite too late to vote against.
Times
21-07-2025
- Business
- Times
Wise founders fight over two-tier share structure
It was a friendship that went on to spawn one of the UK's most successful companies of the past 15 years. Kristo Kaarmann and Taavet Hinrikus were both twentysomething Estonian expats working in London in 2010 and horrified by the fees charged by banks for sending money back home. Thus was born Transferwise, now Wise, an £11 billion cross-border payments business that has made billionaires of them both. However, the friendship this week soured into open hostility as Hinrikus accused Kaarmann, the chief executive, of shoddy tactics in trying to push through on the quiet an extension to a dual share structure that gives him a near stranglehold on all big decisions at the fast-growing cross-border payments group for another ten years. In a letter reproduced on Monday by Wise, Hinrikus accused Kaarmann of endangering the reputation of Wise and contravening shareholder democracy by proposing a plan that would extend the current dual share structure by a further ten years. The detail had been 'buried' in a wider document about moving Wise's primary listing from London to New York. Hinrikus was, he said, 'deeply troubled' by the plan, going on to lament the 'lack of transparency' and the 'contravention of shareholder democracy'. Shareholders had previously been 'expressly promised' when the company floated in 2021 that the dual class structure would be dismantled by July 2026. The proposal 'risks eroding investor confidence, weakening shareholder democracy, and harming Wise's long-term valuation and reputation. Entrenching disproportionate power in the hands of a few sets a dangerous precedent — one that contradicts the values on which Wise built its public credibility,' Hinrikus wrote. He urged fellow shareholders to vote against the proposal unless it is amended and said he had support from several shareholders. It was a brutal criticism from Hinrikus, who stepped back from day-to-day operations at Wise before the London listing, but was chairman until December 2021. He has since gone on to set up an angel-investing business with stakes in more than 150 disruptive start-ups and has a net wealth estimated at $1.3 billion by Forbes magazine. Wise fired back a rebuttal, denying any lack of transparency and arguing that the dual-share structure often produced superior returns, especially among US technology companies that frequently adopted it. David Wells, chairman and a former finance director of Netflix, said shareholders were sounded out and had been 'overwhelmingly in favour' of the plan. • Kaarmann, in a blog post, said many of Wise's shareholders were excited about the proposals, before adding: 'Some people see things differently. My co-founder Taavet expressed his reservations in a letter we shared today.' He said Hinrikus had been 'an important part of our journey for years' but 'no longer plays an active role at Wise'. Through a mix of A shares and vote-heavy B shares, Kaarmann owns an 18.2 per cent economic interest in the company, but 54.7 per cent of the voting power, though this is capped at 49.9 per cent. Hinrikus owns an economic stake of 5.1 per cent, and 11.8 per cent of the votes. His complaint is focused particularly on the 'bundling' of the proposals into a single vote on both the primary listing move from London to New York and a ten-year extension to the current dual shares structure. Hinrikus is proposing a change to the proposals to remove the interconnectedness so that shareholders could vote in different ways on each. It was 'entirely inappropriate and unfair' to combine the two issues in a single vote, he wrote. The planned primary listing switch, first announced in June, had already sent shock waves through the London market, which is concerned that a trickle of listing switches already announced could burgeon into a serious problem for the London market and the ecosystem of bankers, brokers, lawyers and accountants that depends on it. Sir Pascal Soriot, chief executive of Britain's second-biggest listed company, AstraZeneca, is reportedly keen to move too. • Wise value tumbles after revenue growth slows and profit dips The row raises another talking point: many traditional UK investment houses dislike dual voting structures because they can give excessive power to incumbent managements. They argue that 'one share, one vote' is the optimum system. While recent changes to the listing rules have given more power to founders, traditional shareholders are sceptical and this week created a new lobbying group, the Governance for Growth Investor Campaign, to push the case to defend shareholder interests and promote good governance. Others argue that founder-friendly share structures give entrepreneurs the breathing space to make decisions for the long run without being pressured into short-term compromises. Concerns about the governance of Wise have already been highlighted after Kaarmann was named as a deliberate tax defaulter by HM Revenue & Customs after failing to pay a tax bill in 2017-18 and fined £366,000. He explained he fell behind with his paperwork. He was then fined £350,000 last year after an investigation by the Financial Conduct Authority over his fitness to run a big financial institution, but no further action was taken. The company has been a phenomenon, slashing the cost of cross-border payments for individuals and small firms and taking business from traditional banks. It boasted 9.8 million active users in the latest quarter who together hold balances with it of £22.9 billion, up 31 per cent. It employs 2,200 people in Tallinn and 1,000 in London. It has plans to expand into the US, which was one reason given for the listing switch because it would raise the company profile in America, as well as the attraction of higher liquidity in the shares and a larger pool of potential investors to attract. Until recently, Wise had been expected to apply to join a different investment category in London so that it would qualify for inclusion in the FTSE 100. That will not now happen. The proposal requires a majority of both A and B shareholders, as well as a 75 per cent 'super-majority' in the value of shares voted. This threshold, Hinrikus said, had been lowered, a fact he noted was only disclosed 'deep within the body of the [scheme circular] document'. The arrangement would be through a court-sanctioned scheme of arrangement. Proxy voting agencies including Glass Lewis and ISS have given the proposal their blessing. The biggest outside shareholder is the Edinburgh technology investment house Baillie Gifford with an 11.4 per cent economic interest and 10.2 per cent voting interest. Others include the US tech investor Andreessen Horowitz and Jupiter Fund Management. The voting is due to take place at shareholder meetings on Monday July 28.
Yahoo
21-07-2025
- Business
- Yahoo
Wise co-founder condemns ‘inappropriate and unfair' US listing proposals
The co-founder of Wise has criticised the fintech firm's 'inappropriate and unfair' governance changes within plans to move its primary stock market listing from the UK to the US. Taavet Hinrikus wrote a letter to shareholders through his investment vehicle Skaala Investments OU, which owns 5.1% of shares in Wise. The letter criticised the company's proposals to move its primary listing to a stock exchange in the US, but also to extend the voting rights of so-called Class B shareholders by another decade. A dual-class shareholding structure means the Class B shareholders have more than 90% of the voting rights. Such structures have faced criticism that they give minority stakeholders an oversized voting power over a company's proposals. Skaala Investments wrote in the letter that the proposal 'deprives owners of a fair choice and requires them to accept an unnecessary compromise, forcing an 'all-or-nothing' vote rather than allowing shareholders to approve a dual-listing but vote down a resolution granting Class B shares extended voting powers'. 'This prejudices Class A shareholders by diluting their voting power, benefiting those few with significant Class B shareholdings – primarily the CEO (chief executive), Kristo Kaarmann.' The investment group said it was 'entirely inappropriate and unfair to wrap these distinct issues together'. It urged shareholders to vote against the proposals unless the issues can be separated into two separate resolutions. Wise's board responded to the letter to say it 'takes Mr Hinrikus's views seriously' but that it disagreed with his view on the proposal. The company said its proposals would bring 'greater visibility in the US, the biggest market opportunity for our products today', while a dual-class share structure was 'essential to ensuring our continued successful performance and safeguarding our focus on executing our strategy'. The British money transfer firm unveiled plans last month to switch its primary listing from the London Stock Exchange to the US in a bid to tap into a wider pool of banking customers and investors. Wise, which was launched in 2011 under original name TransferWise, said it was not turning its back on the UK, with it planning to keep a secondary listing in London and continue hiring and investing in its UK workforce. It is set to hold a shareholder meeting later this month for investors to vote on the proposal. Sign in to access your portfolio
The Independent
21-07-2025
- Business
- The Independent
Wise co-founder condemns ‘inappropriate and unfair' US listing proposals
The co-founder of Wise has criticised the fintech firm's 'inappropriate and unfair' governance changes within plans to move its primary stock market listing from the UK to the US. Taavet Hinrikus wrote a letter to shareholders through his investment vehicle Skaala Investments OU, which owns 5.1% of shares in Wise. The letter criticised the company's proposals to move its primary listing to a stock exchange in the US, but also to extend the voting rights of so-called Class B shareholders by another decade. A dual-class shareholding structure means the Class B shareholders have more than 90% of the voting rights. Such structures have faced criticism that they give minority stakeholders an oversized voting power over a company's proposals. Skaala Investments wrote in the letter that the proposal 'deprives owners of a fair choice and requires them to accept an unnecessary compromise, forcing an 'all-or-nothing' vote rather than allowing shareholders to approve a dual-listing but vote down a resolution granting Class B shares extended voting powers'. 'This prejudices Class A shareholders by diluting their voting power, benefiting those few with significant Class B shareholdings – primarily the CEO (chief executive), Kristo Kaarmann.' The investment group said it was 'entirely inappropriate and unfair to wrap these distinct issues together'. It urged shareholders to vote against the proposals unless the issues can be separated into two separate resolutions. Wise's board responded to the letter to say it 'takes Mr Hinrikus's views seriously' but that it disagreed with his view on the proposal. The company said its proposals would bring 'greater visibility in the US, the biggest market opportunity for our products today', while a dual-class share structure was 'essential to ensuring our continued successful performance and safeguarding our focus on executing our strategy'. The British money transfer firm unveiled plans last month to switch its primary listing from the London Stock Exchange to the US in a bid to tap into a wider pool of banking customers and investors. Wise, which was launched in 2011 under original name TransferWise, said it was not turning its back on the UK, with it planning to keep a secondary listing in London and continue hiring and investing in its UK workforce. It is set to hold a shareholder meeting later this month for investors to vote on the proposal.
