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SEC met with Spotify to discuss its unconventional route to the stock market 

By | Published on Tuesday 22 August 2017


US finance regulator the Securities And Exchange Commission last month met with Spotify executives to discuss the streaming firm’s plans for a direct listing on the New York Stock Exchange, according to Bloomberg.

As previously reported, Spotify is expected to become a publicly listed company via the somewhat unusual direct listing approach, rather than pursuing a more conventional new-cash-raising Initial Public Offering. It would mean existing shares in the digital music business could be traded on the New York Stock Exchange, but there would be no big new share sale at the point of listing.

Spotify needs to go public sooner rather than later because of the way it structured past loan arrangements, but the firm presumably doesn’t want to dilute its existing shareholders’ stock by issuing a load more shares. Arguably a direct listing is less risky in PR terms, and less expensive when it comes to admin costs, than a conventional IPO, though it does mean the company starts to receive the scrutiny of being a public company – with obligations to report financials once a quarter – without getting a nice big pile of cash at the outset.

Sources say that it was the SEC who requested the meeting and that conversations between Spotify execs and the regulator continue. It is very likely that the SEC wants more time to scrutinise Spotify’s plans simply because it is going with an unconventional approach.

Elsewhere in Spotify shares chatter, which is definitely a thing, Sky News reports that a Goldman Sachs hedge fund has quietly sold off a bunch of its shares in the streaming music firm. Its thought that the private transaction saw Goldman Sachs Investment Partners sell over $75 million of its Spotify stock, though that accounts for less than half of the fund’s stake in the digital music firm.

Goldman Sachs is actually one of the banks advising Spotify on its direct listing, alongside Allen Co and Morgan Stanley. So that’s all fun, isn’t it. Did I mention Spotify has just gone live in Thailand? No? Oh, well, take note please: Spotify has just gone live in Thailand.