Message platform Slack moves ahead with direct listing plans in the US

Slack Technologies Inc. has filed with regulators to go public in the US without disclosing details of its share-sale plans.

The messaging platform company, previously reported to be pursuing a direct listing of its stock, said in a statement Monday that it had submitted a confidential filing with the Securities and Exchange Commission. Slack is working with Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. on the share sale, according to a person familiar with the matter who asked not to be identified because the matter wasn’t public.

Slack plans to forgo a traditional initial public offering and instead intends to sell its shares to bidders in a direct listing, a person familiar with the matter said last month. While that would preclude the company from raising money by issuing new shares for sale, it would avoid some typical underwriting fees and allow current investors to sell shares without a lock-up period.

The company is choosing the unusual method for going public because it does not need the cash or publicity of an IPO, the person said at the time. The share sale, which might take place toward mid-year, could value Slack at more than US$7 billion, according to the person, who added that the San Francisco-based company’s plans could still change.

Chinese car firm Nio makes US$1 billion in NYSE debut as investors stay put

The company was valued at US$7.1 billion in a US$427 million funding round in August.

Representatives for Slack, Goldman Sachs and Morgan Stanley declined to comment. Allen & Co. did not immediately respond to a request for comment.

If Slack goes ahead with a direct listing, it will follow music streaming service Spotify Technology SA, which began trading in New York using that method last year. Its shares, which were given a reference price of US$132 by the New York Stock Exchange, opened trading at US$165.90 in April. Its shares rose 1 per cent to US$138.60 on Monday. Goldman Sachs, Morgan Stanley and Allen & Co. also advised Spotify on its listing.

Slack’s listing plans coincide with possible IPOs this year by other marquee Silicon Valley companies, especially Uber Technologies Inc. A person familiar with the ride-hailing giant’s plans said it could be valued at as much as US$120 billion, which would likely put it among the 10 largest all-time IPOs. Uber’s smaller rival Lyft Inc., as well as Airbnb Inc., is also pursuing a listing.

JPMorgan: tech firms eye US listings as Hong Kong IPOs flounder

Uber and Lyft have been waiting for the SEC’s feedback on their confidential IPO filings before making proposed terms public.

In an IPO, underwriters hammer out the number of shares to sell and at what price, and then take their fees out of the proceeds from an offering. A direct listing allows current investors to offer their stakes directly to new shareholders priced purely on demand.

Slack said in January that 10 million people use its service every day. It said last year that 3 million of those people pay for its premium version of the software. Slack faces competition from Microsoft Corp.’s Teams product, which is free, but it has also prevailed over other rivals. Last year, Atlassian Corp. said it was shutting down HipChat, a similar workplace messaging product, and encouraging its customers to migrate to Slack. Atlassian sold HipChat’s assets to Slack.

In January, Slack hired former Google product management executive Tamar Yehoshua as its chief product officer to replace April Underwood, who said she was leaving the company after almost four years to pursue her own investing venture. Bloomberg Beta, the venture capital arm of Bloomberg LP, is an investor in Slack.