IPO

Lyft to Go Public in 2018

By Christina Desy, LL.M Candidate 2018 | Posted on

On October 19, 2017, Lyft announced that it has managed to secure a $1 billion investment from CapitalG, a growth investment arm of Google’s parent company, Alphabet. This latest round of funding is expected to help the San Francisco based company prepare for its IPO in 2018.

Before the investment was made, Reuters reported that Lyft was already close to hiring an IPO advisory firm to concretize its step of becoming publicly listed. The New York Times reported that the company has also had discussions with investment banks about becoming a public company, but hasn’t decided which bank will lead the IPO.

As the second largest ride service company in the United States, Lyft’s IPO could benefit a broad and diverse group of investors. Before CapitalG’s investment came into play, Lyft had already raised more than $2.6 billion since its founding. Such investments came from numerous venture and corporate investors, including General Motors, Alibaba, and a Saudi Prince, Alwaleed Bin Talal.

Earlier this year, Uber had already expressed its intention on going public as well. Dara Khosrowshahi, Uber’s new CEO, set a tentative timeline for Uber’s IPO. The IPO is projected to take 18 to 36 months from when Khosrowshahi stated the new timeline last August. In the meantime, the CEO aims to focus more on recovering Uber’s image from a range of scandals, as well as its $3 billion loss last year.

Since Lyft does not have to deal with those sorts of issues, it may find it simpler to list sooner than its larger competitor, Uber. Nonetheless, whichever company has its IPO first will set a benchmark for the valuation of a ride-hailing company and test the belief of many auto industry insiders that individual auto ownership will wane as people will sell their cars and rely on ride share services.

Lyft to Go Public in 2018 (PDF)

Aramco Still Plans to Go Public in 2018 in Largest IPO in History

By Jarrah K. Al-Buainain, J.D. Candidate 2019 | Posted on

Early last year, Saudi Arabia’s Crown Prince, Mohammed bin Salman, announced that talks of an Aramco initial public offering (IPO) were in progress. Aramco is by far the largest oil company in the world, with the Crown Prince and other Saudi officials valuing the company above $2 trillion. The public sale of just 5% of the company would mark it as the largest IPO in history (Alibaba’s $25 billion IPO in 2014 is currently the largest).

Aramco’s CEO, Amin Nasser, told the New York Times that the IPO is planned for the latter half of 2018. Where to go public, specifically, is the question that has been causing a stir. According to the Saudi Finance Minister, a listing on Tadawul, the Kingdom’s local exchange, is set in stone. So the burning question is where else will Aramco be listed?

Expectedly, major international exchanges such as the New York and London exchanges are competing as potential venues for the IPO, which will surely bolster trade activity. Rumors have also circulated the past few months of a possible private sale to China – which Aramco’s CEO has denied. Because many believe that an overseas listing occurring before 2019 is not feasible, there has been speculation that Tadawul could be the only exchange where Aramco will be listing.

However, it is important to view the IPO in the context of its timing and purpose. The Aramco IPO is the crux of Saudi Vision 2030, a plan headed by the Crown Prince to diversify the Kingdom’s traditionally oil-based economy and reduce its reliance on oil. Saudi Arabia owns Aramco, and therefore any significant move on Aramco’s part would affect the Saudi economy.

The Saudi Government has made it clear, economic growth beyond current levels is an important and viable long-term goal for the Kingdom. Whatever measures taken by the Kingdom’s prized possession will be carefully designed to accelerate that prosperity. With hundreds of billions of dollars in reserves, Saudi Arabia is not likely going public solely for the payout.

The Aramco IPO has the potential to produce a myriad of fruitful effects for the Saudi financial landscape. The IPO will encourage market transparency within the kingdom and undoubtedly  attract foreign investment, both of which seem it be in line with the Crown Prince’s vision. Given what is at stake for the Kingdom and the potential for adverse legal implications of listing in foreign exchanges, Aramco’s caution in choosing where to list should come as no surprise.

Aramco Still Plans to Go Public in 2018 in Largest IPO in History (PDF)

Snap’s IPO and Lack of Shareholders’ Rights

By Frederic Peeters, LL.M. Candidate 2017 | Posted on

Snap Inc. (“Snap”) recently filed its IPO with the SEC. The intended IPO of the parent company of the messaging app Snapchat has already been heavily debated and various commentators have criticized Snap’s intended governance structure.

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Snap Aims for Valuation of More Than $20 Billion in IPO

By Lindsey Sugimoto, J.D. Candidate 2019 | Posted on

Snap Inc., the parent company of Snapchat, is positioned to be one of the biggest initial public offerings in the technology industry in years. The company will have the ticker symbol SNAP and is expected to begin trading early March. Snap has an expected potential value of about $22.2 billion, with its midpoint being close to $20.9 billion based on offerings in the range of $14 to $16 per share. Despite being lower than the $25 billion that Snap anticipated, it is significantly higher than the $16.5 billion that the company valued itself last year.

At a similar stage of the offering process, Snap will trail Facebook, as Facebook was valued at around $86 billion. Yet, Snap will greatly exceed Twitter’s valuation of $12 billion back in October 2013.

Snap will be beginning a two-week tour with three of Snap’s top executives to sell investors on one of the most promising and fruitful IPOs this year. The three executives include co-founder and chief executive Evan Spiegel, chief strategy officer Imran Khan, and chief financial officer Andrew Vollero. This tour officially began on Thursday, when Morgan Stanley hosted the executives to speak with its sales force. Goldman Sachs, another underwriter, installed the Snap’s Spectacles vending machine in its lobby.

Snap’s investors have questioned whether Snap has the ability to maintain its use growth rate, especially given Facebook’s recent additions in Instagram that mirror much of Snap’s features. While this may be so, Snap maintains that it averaged around 158 million users a day last year, and has focused its primary efforts in North America and Europe, as opposed to worldwide.

Additionally, investors are wary about Snap’s ability to maintain profits. Despite the company’s loss of $154 million last year, its revenue grew from $58.7 million in 2015 to $404.5 million last year. This boosted revenue stems from Snapchat’s decision to provide services for both users and advertisers. Starting off a platform for people to send disappearing messages, Snapchat has evolved to allow users to create “stories” and play with filters that have face-swaps or paid-for content.

Yet, one caution for investors is that they will have minimal influence in the company’s management, as the co-founders will be retaining about 89 percent of the voting shares. The shares in the offering will not include voting rights.

With so much speculation, Snap’s IPO is one to watch. Snap’s IPO may reflect the market’s appetite for other tech IPOs and may affect Snap’s reputation as one of today’s leading technology companies.

Snap Aims for Valuation of More Than $20 Billion in IPO (PDF)

The Impact of the Presidential Election on IPOs

By Marcela Verástegui, LL.M. Candidate 2017 | Posted on

The uncertainty of the 2016 presidential election is impacting investors and IPOs, especially due to Americans’ wide dislike for both candidates. Given the political climate, investors feel unstable and insecure. As a result, the stock market has slowed down considerably this year. However, according to the Presidential Election Cycle Theory, once the presidential election has passed, stock markets are predicted to behave normally during the first year of the new presidency. This is so because investors are going to feel renewed stability and therefore they will begin to invest and move the economy.

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Snapchat Poised for IPO in 2017

By Emmett Carrier, J.D. Candidate 2018 | Posted on

Everyone’s favorite message disappearing app is reportedly preparing the paperwork to file an IPO as early as next March. Snap Inc., parent company of Snapchat, received a valuation of $17.8 billion in May, but a public offering next year could potentially price the company at $25 billion or more.

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US Foods Plans to Go Public Following Failed Merger

By Patrick Atchison, J.D. Candidate 2018 | Posted on

On February 9, 2016, US Foods filed a “Form S-1” registration statement with the US Securities and Exchange Commission (SEC) for an initial public offering (IPO). US Foods’s announcement marks only the third US IPO of 2016, a year marred by heightened volatility in global equity markets.

Founded in 1988, US Foods is the second largest food distributor in the United States, supplying over 250,000 customer locations nationwide. US Foods delivers national brand foods and its own food products to supermarkets, educational institutions, restaurants, and medical facilities throughout the nation. Two private equity firms, Clayton Dubilier & Rice (CD&R) and Kohlberg Kravis Roberts & Co. (KKR), own the food distributor.

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Square’s IPO and the Tech Industry

By By Kate Kennedy, J.D. Candidate 2017 | Posted on

Much speculation surrounded Square’s IPO. Facing a struggling IPO market and steep competition from companies such as Apple and PayPal, many wondered if Square could reach its fundraising goals. These fears were confirmed when Square set its IPO price at $9 per share, well below the expected range of $11-$13. However, after its public debut on November 18th, shares opened at $11.20, and at one point, increased more than 64 percent. Square closed its first day of trading at $13 per share, still 45 percent above its initial public offering price.

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