ZCZC
BCN-15
US-MARKET-COMPUTER-SLACK
Tech firm Slack to make market debut, at $26 reference price
SAN FRANCISCO, June 20, 2019 (AFP) – Cloud-based software firm Slack
Technologies makes its debut on the New York Stock Exchange Thursday with a
reference price of $26, adding to this year’s parade of new Wall Street
entrants.
Unlike two of the year’s biggest names, Uber and Lyft, which held initial
public offerings, Slack will undertake a direct listing.
A reference price is not the initial price, as in an IPO, but rather an
indication given by the bourse before initial buy and sell orders that will
actually determine the value.
The arrival of San Francisco-based Slack — which markets online tools for
information sharing and workflow management — underscores investor hunger
for new companies in spite of some high-profile stumbles.
Nearly halfway through the year, US markets are on track for one of the
biggest IPO seasons ever in terms of money raised following a stream of
offerings from former “unicorns,” private companies worth more than $1
billion.
Swedish music streaming firm Spotify also entered the market with a direct
listing last year.
This approach cuts down on fees to investment bankers in IPOs. Although
existing shares can be sold, a direct listing does not issue new shares,
averting share dilution but also forgoing the new funds raised in an IPO.
The process can also be riskier in terms of share price volatility
compared with an IPO, where underwriters line up investors in advance. In a
direct listing, shares are exposed more directly to the open market.
Slack’s valuation has jumped from about $7 billion in August 2018, when it
last raised funds, to around $17 billion, according to Renaissance Capital,
which specializes in the IPO market.
BSS/AFP/HR/1015