Spotify’s historic listing on the New York Stock Exchange in early April will be remembered by US equity capital markets (ECM) bankers for the wrong reasons.
The music-streaming business shunned the traditional initial public offering (IPO) model and instead opted for a so-called direct listing. This unusual, though not unprecedented, route to market allows existing equity owners to sell their stakes on exchange while the company itself does not issue any new shares.
With no roadshow and no underwriters, banks played only a minor role, meaning they missed out on the fees that should have accompanied one of the US’s most eagerly anticipated flotations. Nonetheless, Spotify’s listing follows US ECM bankers’ busiest quarter in three years.
Statistics from IPO investment advisor Renaissance Capital reveal the country saw 44 listings from January to March 2018, which raised a total of $15.6bn. By proceeds it was the biggest first quarter since 2008 and the biggest quarter in three years.
It was driven by megadeals, with a handful of $1bn-plus IPOs accounting for nearly half the overall proceeds. Biotech was the dominant sector, accounting for a quarter of the 44 listings.
All data sourced from Renaissance Capital’s Q1 2018 US IPO Review
