Spotify the music streaming service filed confidentially with regulators in the U.S. for its initial public offering is eyeing a direct listing during the first six months of 2018 that would give the opportunity to some of its investors to cash out, said a source familiar with this matter.
If Spotify proceeds with its IPO plans, it would be the first big company to have a direct listing, which is an unconventional way of pursuing an IPO as it does not raise any new capital. Spotify was valued at $19 billion in 2017.
Direct listings eliminate a need for a broker or bank from Wall Street to underwrite the IPO and several associated fees. They also could change how companies approach the selling of shares to the public.
The United State Securities and Exchange Commission now allows companies, regardless of the amount of revenue, to file draft IPO registration statements confidentially prior to unveiling financials.
Spotify is the largest worldwide music streaming business and counts Amazon.com and Apple as its biggest rivals. It has been reported previously that Spotify was going to file for its IPO late in 2017, and would list it early in 2018 on the New York Stock Exchange.
Spotify last week was sued for the alleged use of hundreds of songs without the proper license and not compensating the music publisher. Wixen Music Publishing filed the suit that is seeking $1.6 billion in damages.
Spotify is going to proceed with its direct listing in the U.S. sometime during the first six months of 2018 despite being sued, said the source familiar with this situation.
The pending lawsuit is not likely to have any major impact on the IPO for Spotify, said one copyright lawyer not involved with the case. He added that he believes that Wixen will settle the case for much less than what it is seeking and it was not likely any of the lawsuits will reach trial.
The lawyer added that it was not in the best interest of Wixen or its constituents to stop Spotify or inflict any harm on its business because it currently is the leader in the streaming field.
The company in June said it had over 140 million users and listed over 30 million songs. The last time Spotify reported its users, it said it had over 60 million who were paid users, twice the number of Apple its nearest rival.