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Bloomberg: Morgan Stanley, Goldman Make Their Own Direct-Listing Pitches

Alexandra Hamer

Alexandra Hamer

From the STA Conference in Washington, DC—Silicon Valley investors are touting direct listings to startups as a way to sidestep Wall Street banks and the IPO process. The biggest investment banks want to make sure they stay in the mix.

Morgan Stanley is organizing an event about direct listings on Oct. 21 in San Francisco, according to people with knowledge of the program. It will take place at the West Coast outpost of the New York Stock Exchange, the people said, asking not to be identified because the information hasn’t been made public. Goldman Sachs Group Inc. held a session on direct listings during its Private Innovative Company Conference in Las Vegas Thursday.

The gatherings follow a closed-door confab of venture capital firms, investors and entrepreneurs on Tuesday, in which organizers promoted the alternative to initial public offerings that wrests power away from banks and avoids a first-day price pop. In one of this year’s highest profile examples, shares of Beyond Meat Inc. surged 163% on their first day of trading after the company’s May IPO. While investors that took shares in the IPO made a big profit, the day-one price surge suggests it was priced below its actual value.

Under a direct listing, a company makes its shares available for trading on a stock exchange without the formalities of a traditional IPO. That means no road show, no underwriter and no offering price, according to a blog post by John Tuttle, NYSE’s vice chairman and chief commercial officer.

“There’s an understanding that capital raising can be decoupled from becoming a public company, and that’s sparking a lot of questions about how and when a company should go public,” NYSE President Stacey Cunningham said in an interview at an equity-market conference in Washington. “A direct listing is a new tool.”

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