Slack plans to go public to bypass the traditional IPO mechanism

    According to The Wall Street Journal, Slack management plans to go public. At the same time, the company is inclined to the option in which the traditional IPO mechanism will not be involved. Shares will be placed directly, and the company's valuation will be about $ 7 billion.

    For information on why more and more IT companies are choosing a direct placement mechanism - read our new material.

    Slack and the stock market: some history

    According to the WSJ, Slack can go public in the second quarter of 2019. The company's plans to enter the stock exchange have changed several times. Last year, rumors spread to the press that Slack attracted Goldman Sachs to prepare an IPO for a company valuation of $ 10 billion.

    At the same time, in November 2018, Slack co-founder and CEO of Slack said in a commentary to Fortune that the company did not certain timeframes for an IPO: "We have been moving towards becoming a public company for several years now, and we plan to continue this work."

    Now, as the journalists found out, the Slack management is inclined to conduct a direct offering of shares instead of using an expensive IPO procedure, in which investment underwriters attract institutional investors. Despite this, the final decision on the form of access to the exchange has not yet been made.

    Why do you need direct placement of shares

    Many startups are increasingly using the mechanism of direct placement of shares instead of IPO - it is much cheaper. The services of underwriting banks that prepare traditional IPOs are expensive - usually underwriters charge from 2% to 8% for their services. That is, a significant amount of funds raised through IPO goes to intermediaries.

    The mechanism of direct placement (Direct Listing, DLP) allows investors or even employees owning shares of a company to sell them directly on the exchange. At the same time new shares are not issued.

    The disadvantage of this method is that there is no guarantee of selling all the shares, and the company needs to organize the trading process on its own.

    Last spring, this is the way to access the stock exchange usedstreaming service Spotify. On the day of the start of trading, the company's shares were worth $ 149 apiece, rose to $ 196.28 by July, but fell to $ 121 by the end of the year.

    Recall that last summer Slack attracted another round of investments - then the company received $ 427 million, with an estimate above $ 7 billion. During all its existence, the company attracted $ 1.2 billion in investments during seven investment rounds.

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