Tuesday, January 25 2022

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Direct registrations have increased this year, but slowly, like a houseplant. Meanwhile, initial public offerings and specialist acquisition mergers have exploded: Dealogic says 942 companies went public in 2021, including 383 IPOs and 599 PSPCs. Direct registrations? Just seven.

In april 2018


Spotify

launched the first direct listing, in which shareholders, but not the company, sell shares early. Direct listings were initially seen as a threat to traditional IPOs. Some leading companies—


Palantir
,


Roblox
,


Coinbase
,


Warby parker

– used the process, but the club remains tiny, at 13 years old.

Still, direct ads have fans. Jay Ritter, observer for the University of Florida’s IPO, is optimistic, as long as there are no explosions like accounting scandals. “More and more companies will use direct listings to avoid selling undervalued stocks during a traditional IPO or the dilution due to sponsor actions that accompany a PSPC merger,” he said. . Eddie Molloy, Co-Head of Equity Markets for the Americas at Morgan Stanley, adds Eddie Molloy: “They won’t replace IPOs, but provide companies with another route to public markets. “

The process works best for businesses that don’t need capital. Direct advertisers use Wall Street companies as financial advisers (and sometimes as market makers), not underwriters. As a result, the fees are “significantly” lower, says David Ethridge, co-head of PwC’s IPO service unit, although it is difficult to determine with so few direct listings.

In addition, institutional investors can sell immediately on a direct quote, without a lock-in, while small investors do not have to buy in a huge day one run-up. And businesses avoid the risk of bad pricing.

Last week

Back on track

After variant-induced index losses two weeks ago, Bitcoin plunged on Saturday and partially recovered on Sunday, a stumble blamed on institutional trading. But shares rose on news that the Omicron variant could be less severe and that China was preparing to write off defaults;


Apple

nearly a market capitalization of $ 3 trillion. The Big Quit continued: 4.2 million people left their jobs in October, slightly less than in September. Inflation stood at 6.8% year-on-year, a level last seen in 1982. Yet it was a bullish week, with the


Dow Jones Industrial Average

up 4% to 35,970.99; the


S&P 500

up 3.8% to 4,712.02; and the


Nasdaq composite

rising 3.6% to 15,630.60.

Sweet, but contagious

Early data from patients in South Africa suggests that Omicron may be less severe than previous variants, if it was more transmissible. Fewer patients appear to require ventilation in the intensive care unit.


Pfizer

said a third dose of the vaccine should be able to handle Omicron.

The face of the fault

China’s central bank has cut reserve rates to stimulate a sluggish economy. China Evergrande stock fell to its lowest level in 11 years after the company said there was no “guarantee” that it could support its debt and that it would “actively engage” with the government. Evergrande then exceeded the grace period for an $ 82 million bond payment, and Fitch declared the developer (and another, Kaisa) in “narrow default” or in default without filing for bankruptcy. By this time, officials had joined Evergrande’s new risk committee and arrived to oversee its finances.

Talk about Ukraine

President Joe Biden called a virtual summit with Western allies to discuss strengthening Russian troops on Ukraine’s eastern border, then held a two-hour video conference with Russian President Vladimir Putin. Biden warned Putin of heavy sanctions if Russia invades Ukraine and urged Germany to block Russia’s Nord Steam 2 pipeline if Russia hits.

Fiscal household

The House approved bills on extending the debt ceiling and on military spending. The Senate then voted to reject filibuster in a debt ceiling vote, which would allow the measure to pass without GOP votes. End of crisis for the moment.

Annals of negotiation

Activist investor Engine Capital urged


Kohl’s

to sell or part with its e-commerce unit… BuzzFeed shares gained 50%, then lost 11% when they started. After merging with a SPAC, the online media company saw investors withdraw 94% of their money from the deal … The Securities and Exchange Commission is investigating two PSPC deals: the planned merger of former President Donald Trump’s Trump Media and Technology Group with Digital World, and the SPAC Accord for electric vehicle maker Lucid. Trump Media also hired outgoing Rep. Devin Nunes to be its CEO …


Intelligence

said he would go public with his autonomous driving unit, Mobileye, which he bought for $ 15.3 billion in 2017 …


Vivendi

announced the launch of a takeover of Lagardère, owner of the publisher Hachette.

Write to Luisa Beltran at [email protected]

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