Fenwick corporate partner Ran Ben-Tzur talked to Reuters about the rising popularity of direct listings as an alternative to the traditional IPO.

In the past two years, there have only been two direct listings, but recently two more companies—Asana and Palantir—went public via a direct listing on the same day, Reuters reported.

“I think we were going to see more direct listings this year but for COVID-19. Many companies that were thinking about a direct listing switched to an IPO for the capital raise aspect,” Ran told Reuters.

He also talked to Reuters about lock-up agreements—which are standard in IPOs but were only used widely in one direct listing (Palantir) thus far, according to Reuters.

“Banks have done the math on the impact of not having lock-up agreements in a traditional IPO and believe that without a lock-up structure a company will not able to raise at as high of a valuation because there’s no scarcity of shares,” Ran said.

For the latest information on direct listings, read the article Ran co-authored, The Latest and Greatest on Direct Listings: Direct Listings + Capital Raise, Lock-Up Agreements, COVID-19 and More.

Also see the full Reuters piece.

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