By James Inness and Sean Meehan

Latham & Watkins recently advised the largest global music streaming subscription service in the world, Spotify, on its successful New York Stock Exchange (NYSE) listing using a novel direct listing process.

Spotify’s direct listing did not involve a primary or secondary offer. In addition, no underwriters were appointed, no roadshow process was undertaken, and no IPO-specific lock-up agreements were entered into with existing shareholders.

Instead, these pillars of a typical underwritten IPO were replaced with an offer structure based on a purely market-driven approach to price setting with existing shareholders being free to sell all or part of their shares from day one without the usual 180 – 360 day post-admission restrictions. In addition, the roadshow process was replaced with a public investor day that was available to view live on its website by both institutional investors and retail investors. While certain banks acted as financial advisors in respect of the listing, they had no role in advising on investor meetings, facilitating price discovery activities, or conducting after-market stabilisation activities.