The New York Stock Exchange on Wednesday secured regulatory approval for its proposal to let companies raise capital through direct listings, opening the door to a rival to the traditional initial public offering.
The decision from the Securities and Exchange Commission will allow companies to issue new shares to the public in a process known as a primary direct floor listing. The process relies on an opening auction that matches buy and sell orders to set a company’s offering price on the day it lists.
Direct listings in their earlier form had only allowed existing investors of a privately held business to sell their stakes on the public market. The company itself could not raise capital through the offering.
The approval has been long in the making, handing a win to both the NYSE and venture capital groups who have pushed for an alternative to the IPO.
The process, which can be completed in tandem with the earlier direct listing, does not rely on underwriters to price shares like a traditional IPO. There is also no formal marketing roadshow or the customary shareholder lock-ups that keep early investors from offloading their stakes. Investment banking fees are often substantially lower than an IPO as a result.
The opening auction in a primary direct listing would also answer a critique from venture capital groups who have complained that IPOs are often priced too cheaply, handing gains from the first day “pop” to new investors instead of the company.
The SEC said the NYSE proposal provided for a “different price discovery method for initial public offerings which some believe may result in more appropriate pricing for the offered shares”.
The US securities regulator added: “The commission believes that the proposed rule change . . . may allow for efficiencies in the way IPOs are priced and allocated without sacrificing investor protection.”
While several high-profile companies have used direct listings to go public, including streaming music provider Spotify and messaging application Slack, they have remained a relative rarity over the past year and were seen as an option for companies not in need of cash.
That changed this week after two well-known technology groups said they would use direct listings to go public. Palantir, the data analytics company, and Asana, the maker of workplace productivity tools, both filed paperwork with the SEC to float through direct listings.
Nasdaq, the rival to the NYSE, this week filed with the SEC to allow companies to raise money when completing a direct listing.
"traditional" - Google News
August 27, 2020 at 11:04AM
https://ift.tt/32wVoaK
NYSE given go-ahead for alternative to rival traditional IPOs - Financial Times
"traditional" - Google News
https://ift.tt/36u1SIt
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "NYSE given go-ahead for alternative to rival traditional IPOs - Financial Times"
Post a Comment