Airbnb’s is on an unconventional path to the public markets

AIRBNB’S long-awaited Wall Street debut is officially earmarked for 2020, but the home-share start-up is charting an unconventional path to the public markets. San Francisco-based Airbnb is laying the groundwork for a direct listing rather than an initial public offering (IPO), according to people familiar with the matter who asked not to be named discussing private information. Airbnb declined to comment. Technology startups usually choose a traditional IPO to tap into the public markets. Some of the new generation of tech firms have spent years raising private funds and don’t necessarily need money from an IPO to expand their business, but are looking for a way to let employees and investors cash out. A direct listing allows companies to lower the millions of dollars they typically pay to investment banks in underwriting fees, because they don’t issue any new shares and don’t raise any new capital. Instead, they let the market choose the price. Slack Technologies. and Spotify Technology have taken the direct listing route. An IPO would also force Airbnb to open its books to investors. The We Company, which was supposed to have an IPO this autumn, had to withdraw its plans after some investors took a look and were highly critical. Amid the ensuing scrutiny, the chief executive was forced to resign and financial advisers said WeWork’s potential valuation would likely fetch only about a quarter of its earlier $47 billion (R712bn) price tag. yesterday, hundreds of venture capitalists and executives from private companies will met in Silicon Valley to discuss the benefits of direct listings. | Bloomberg