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Could Spotify 'IPO' (without an IPO) as early as September?

08 April 2017

Unlike the IPO, which combines a public offering and an exchange listing in a single step, the direct listing separates the going public process into two discrete steps - an exchange listing and a subsequent follow-on or alternative registered offering. Spotify, which has raised more than $1 billion in equity, was last valued privately at $8.5 billion in June 2015.

Though that might not go quite as had been expected, according to sources who have spoken to the Wall Street Journal.

Due to market forces determining share price, a direct offering is said to be a risky approach - one which could result in a displeasing initial market cap.

Last year Bloomberg reported Spotify meant to go public in the second half of 2017.

Spotify spokesperson Jonathan Price at the time said that exclusives like these were bad for artists and fans alike: "Artists want as many fans as possible to hear the music, and fans want to hear the music they're excited about".

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Though it does land Spotify with the extra scrutiny of being a publically listed company without providing a nice big cash boost at the outset.

It is now unclear whether a direct listing, as opposed to an IPO, would satisfy the terms of this agreement.

Spotify is reportedly considering skipping out on its own IPO, in a controversial move that has left many experts scratching their heads.

As part of its new deal with Universal Music Group (UMG), Spotify is allowing artists to limit the availability of new albums on its platform to paying subscribers only for two weeks. A direct listing would help Spotify avoid some of the fees and hassle of an IPO, and wouldn't have to dilute the existing shares of the company. It has yet to reach long-term accords with the two other major labels, Sony Music Entertainment and Warner Music Group Corp.

Could Spotify 'IPO' (without an IPO) as early as September?