NYSE ANGLING TO ATTRACT SPOTIFY

The New York Stock Exchange wants to list Spotify and is prepared to change its rules to attract Daniel Ek’s streaming service to the big board, The Wall Street Journal reports.

The Securities and Exchange Commission is expected rule by 6/29 on a request the NYSE made to eliminate roadblocks to direct listings that bypass the IPO process. Direct listings allow companies to circumvent traditional initial public offerings and have no restrictions on when insiders can sell shares.

Valued at $8.5b, Spotify could go public late this year, The Journal reports, and has been soliciting advice from bankers and NYSE personnel about a direct listing.

Nasdaq has been the exchange of choice for start-ups and private companies and was expected to get the Spotify listing. In a letter to the SEC, NYSE wrote that the adjustment of the rule would eliminate a “significant competitive disadvantage.”

The Journal says the advantage for direct listings is that so-called “unicorns” can to avoid underwriting fees, which can reach into the tens of millions of dollars. Direct listings also make it easier for existing shareholders companies to cash out more quickly.

The risk is that a company’s shares miss their mark on day one as Facebook did in 2012.

The cost of IPOs has led to numerous companies remaining private, among them Spotify and Uber. If Spotify goes the direct route, plenty of other companies may follow suit, chiefly AirBnB.

In NYSE’s proposal, a private company could do a direct listing if the value of the company’s publicly traded shares exceeded $250m, based on a third-party valuation.