Top Banks Say Big Tech Companies Might Choose Direct Listing Over IPO
JPMorgan and Goldman Sachs predict that more big tech companies will choose direct listings over initial public offerings in the future, according to Business Insider.
Spotify and Slack are two giant tech companies that chose direct listings over initial public offerings when they chose to go public earlier this year. Industry experts at JPMorgan and Goldman Sachs are expecting more companies to take this route in 2020 and the future.
Earlier this month the Securities and Exchange Commission (SEC) shut down a proposal from the New York Stock Exchange that would have allowed companies to rake in capital from a direct listing. Reform for both IPOs and direct listing are expected in the future as well.
"We're absolutely on the side of innovation and want to find more paths to the public markets," said Nick Giovanni, the co-head of Goldman Sachs's global technology, media and telecom group. "We understand the private markets have changed and companies don't need to raise capital when they go public in all cases. We led the Spotify and Slack direct listings, and we're working on more now."
Although, most companies will still choose an initial public offering when they choose to go public to the historical success of the method and effective amount of capital they raise.
JPMorgan and Goldman Sachs are predicting that more companies will choose direct listings over IPOs when they choose to go public in the future.