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SEC approves NYSE rules change to allow direct listings
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Category: NYSE, IPO, SEC

SEC approves NYSE rules change to allow direct listings

02.07.18

Earlier this month, the Securities and Exchange Commission approved a proposed change to New York Stock Exchange listing rules that will allow a private company that has not completed a firm commitment underwritten initial public offering to apply for its securities to be admitted for trading on the exchange, provided the company can demonstrate at least a $250 million valuation for its publicly held shares.

This valuation requirement is at least 6.25 times higher than the valuation amount required for applicants seeking to list shares on the NYSE in connection with underwritten IPOs and 2.5 times higher than the valuation amount required for applicants seeking to transfer their listing from another market.

Even if a company is able to demonstrate satisfactory share valuation (i.e., either through trading on a private secondary market or, in the absence of any recent trading in such a market, from a recent valuation provided by an independent financial firm that has significant experience in providing such valuations), listing will be at the NYSE’s discretion.

The rule change allows companies to apply for listing on the exchange without raising additional capital through the traditional, underwritten IPO process. It has been reported that Spotify will use this process to list its shares on the NYSE in the near future, and many believe many other cash-rich startups such as Airbnb and Uber may follow suit in order to provide liquidity to their employees, financial backers and other stakeholders and to create acquisition currency for business combinations.



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