NYSE Phone Rings as Interest in Direct Listings Spreads Abroad

(Bloomberg) -- Foreign companies are showing greater interest in direct listings in New York as an alternative to initial public offerings, according to the stock exchange.

Following the high-profile examples of startups Slack Technologies Inc. and Spotify Technology SA in the past two years, more private companies including Airbnb Inc. have considered the process. And interest is spreading abroad, according to the New York Stock Exchange's head of international capital markets, Alexandre Ibrahim.

“We receive a lot of calls all the time, because when we listed Spotify, it's a Swedish company, and this year Slack -- it got tremendous visibility all over,” said Ibrahim in an interview in Tel Aviv. While he wasn't aware of any non-U.S. companies actively preparing for a direct listing, “that could change,” he said.

Listing this way entails fewer fees for bankers than a traditional IPO and doesn't involve selling new shares or raising capital. Some companies favor them as a way of avoiding the so-called “pop” of an IPO, when new shares can be discounted by banks so they spike higher in trading.

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Ibrahim said that the world's largest stock exchange has enjoyed a resurgence of international listings in recent years, helped by regulatory changes in the U.S.

“We have a strong pipeline of non-U.S. companies and most of them are actually from China,” Ibrahim said. Chinese tech firms coming to market are focusing on education, finance and artificial intelligence.

Israeli companies that have recently chosen the NYSE for listings include freelancer marketplace Fiverr International Ltd. and cyber-security business Tufin Software Technologies Ltd. Ibrahim was in Tel Aviv for meetings, with the goal of emphasizing the NYSE's attractions to an audience that has historically regarded the Nasdaq as the prime destination to go public.

The trade war and darkening global economic outlook are taking a toll. Chinese companies listed in the U.S. are a potential target for the White House, and the administration has discussed forcing such firms to delist from U.S. exchanges among options to restrict investment.

“We started the year very strong, but all the noise in Washington, trade wars, the listings actually slowed down a little bit,” Ibrahim said. “Now probably is not as strong as it was a few months ago, but this will change.”

To contact the reporter on this story: Ivan Levingston in Tel Aviv at ilevingston@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, John Viljoen, Namitha Jagadeesh

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