Briefing

Slack plans to follow Spotify on unconventional IPO route

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The listing will likely be in the second quarter of 2019. The company expects it’ll be at a valuation in excess of US$7 billion. Slack is working with Goldman Sachs Group Inc., Morgan Stanley and Allen & Co.; the three also worked with Spotify on its direct listing in April 2018. (Wall Street Journal)

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Talking point: Slack is the largest tech company to try Spotify’s unconventional IPO approach. Companies that go public in a direct listing bypass the traditional underwriting process, allowing the open market to set the price of their shares. Wall Street is concerned that more major companies will list directly rather than using their services to IPO; however, most companies don’t have the cash to cover it—or the research analysts to generate interest—on their own. Regardless of method, Spotify’s listing was expect to generate major investor interest because of its broad name recognition; it’s unclear if Slack’s name is well-known enough to do the same. Spotify’s listing had no major issues when it went public, but its stock is almost 17 per cent below where it closed the first day of trading.