Virtual IPOs/Direct Listings: Uninhibited Price Discovery

Necessity is the mother of financial innovation. The non-traditional listings of Spotify Technology SA (SPOT US), Slack Technologies Inc (WORK US) and Palantir Technologies Inc (PLTR US) exhibit an increasing trend toward direct listings, in place of traditional IPOs incorporating lock-up agreements and dysfunctional pricing and allocation process.

This week Airbnb announced plans to go public next year joining the ranks of companies like Spotify and Slack that have used a direct listing to go public.

Is this IPO shortcut route appropriate for all companies? What are the pros and cons? And closer to home, which exchanges are open these virtual IPOs?

In this insight, I address the questions above, discuss various discussions with exchanges in the Asia-Pac regions, and also analyse alternative IPO routes such as special purpose acquisition company (SPACs).