Until shares can be sold, ‘valuations’ remain fake wealth. With Friends like these…
Goldman Sachs’ hedge fund, Goldman Sachs Investment Partners, has offloaded over $75 million of Spotify shares, or ‘less than half’ of its stake, in recent weeks, Sky News ‘has learnt’ from ‘insiders.’ This is peculiar because the Swedish music streaming service is preparing to list its shares on the New York Stock Exchange at a valuation of $13 billion, and confusingly, Goldman Sachs is one of the three investment banks that are advising Spotify on this ‘direct listing.’
A source told Sky News that Goldman Sachs had ‘practical reasons to sell a small stake.’
So what does Goldman Sachs know that others don’t?
A ‘direct listing’ is not an IPO. It bypasses underwriters and their hefty fees and avoids the whole issue of IPO pricing. It also means that Spotify would not raise any new capital via this listing, which is planned for later this year or early next year. If it succeeds, it’ll be the first major direct listing on the NYSE. If other companies follow the example, investment banks, losing out on underwriting fees, would not be happy campers.
Spotify is one of the 167 ‘unicorns’ in the US, Europe, and Asia listed in the Billion Dollar Startup Club: venture-capital funded startups that have reached ‘valuations’ during their last round of fund-raising of $1 billion or more.
This post was published at Wolf Street by Wolf Richter ‘ Aug 18, 2017.
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