Slack takes an unusual route to public markets, and probably value about $ 16 billion

Slack takes an unusual route to public markets, and probably value about $ 16 billion
NEW YORK - Slack Technologies, the rapidly growing communication and messaging platform in the workplace, is ready for an unusual public price on Thursday that will see it listed on the New York Stock Exchange and could value it at around $ 16 billion, according to a familiar person With the subject.

The so-called direct listing, which differs from a traditional IPO in that it does not raise new funds, will test a pioneering method last year by the music transmission company Spotify Technology.

"We think the jury is deliberating on whether this is the right move or not," said Kathleen Smith, director and manager of the IPO ETFs at Renaissance Capital. "Looking at Spotify, it takes a little time for the actions to be established after a direct quote."

Slack's debut follows a series of highly anticipated technological IPOs, some of which, including Uber Technologies Inc and Lyft Inc, had disappointing start to operations.

The direct quote model offers Slack the opportunity to save significantly on investment banking fees and avoids agreements that would otherwise prevent many current shareholders from selling their shares.

Slack's direct list could have implications for other large technology companies, such as Airbnb, which is considering making a similar approach public, said one person familiar with the subject.

The New York Stock Exchange set a reference price of $ 26 per share on Wednesday, indicating a value of around $ 16 billion. The reference price is not a commercial price but is used in the process of building an order book.

For his listing, Slack expects to pay $ 22.1 million in fees to his financial advisers. In comparison, banks earned $ 85 million in commissions from Snap Inc's 2017 IPO, which was worth around $ 31 billion at the time of its public listing.

The direct inclusion of Spotify in April 2018 was perceived as a success at that time, with a healthy number of buyers and sellers.

More than a year after going public, Spotify shares are trading around 15% below where it debuted when the music company sacrifices profit margins to generate growth.

"Direct listings are still a fairly new vehicle. It's really interesting to see how that evolves, "Fiverr executive director Micha Kaufman said in an interview last week after the Israeli-based company went public.

"But it's definitely more appropriate for companies that have raised larger sums for long periods of time in the private market, and really want to give their investors a raise or an exit."

Slack, based in San Francisco, reported that revenues increased more than 80 percent to $ 400 million in 2018 when its operating losses were $ 143.85 million. It has more than 90 million users, but so far it only has around 100,000 paid customers.

Slack had about $ 295 million in total cash or cash-like assets at the end of April and has raised about $ 1.2 billion so far from private investors, according to data provider PitchBook and the company's regulatory filing.