Greetings readers on this rainy Monday in Manhattan. Today we’re taking you on a ride with Amplitude’s CEO through its recent direct listing, looking at a deal Qualcomm revealed today that involves a new firm founded by Antonio Weiss, and recapping some big IPO news.
Today's top stories
Founders’ choice
In the weeks leading up to the direct listing of software and analytics company Amplitude, I shadowed Spenser Skates, the 33-year-old CEO and co-founder, to understand the process. – Crystal Tse
Since 2018, nine companies have gone public through a direct listing. Proponents say they help avoid an eye-popping first day gain that can leave some wondering whether shares were sold too cheaply.
Skates got the idea two years ago to do a direct listing and spoke to nearly every company that has done one. He even discussed it with Jay Ritter, a University of Florida professor who studies them.
Skates said that it was obvious that a direct listing was a better option for the San Francisco-based startup.
“Traditional IPOs are good for investment banks and public market funds,” he said. “CEOs get confused who they represent, it's not their job to give free equity to public investors.”
The performance of direct listings has been mixed since Spotify started the trend in 2018. Some are up a lot, like Asana and Palantir, while Coinbase has struggled.
Amplitude’s board, including the VCs Benchmark, Sequoia and Battery Ventures, weren’t as quickly convinced by the direct listing plan as Skates was.
Benchmark has long been a champion of the model with its partner Bill Gurley one of the most prominent advocates. Still, its VCs were skeptical.
“They’re already taking so much risk on the innovation, they don’t want to take risk in the process,” Skates said.
Its backers did come around after weighing the pros and cons. Sequoia partner Pat Grady said he likes to compare a traditional IPO to reaching your potential in high school, a quote minted by Zoom CEO Eric Yuan. “No one wants to be the person who peaked in high school!”
A week before the listing, there was internal debate on how Amplitude employees would watch the investor day and whether Zoom would be able to handle them tuning in live.
The VP of IR, Jason Starr, warned Skates and the other execs to speak slowly since “all of us have massive amounts of adrenaline.” Skates and the CFO, Hoang Vuong were juggling the earnings rehearsal with meetings with investors like Wellington.
I learned that the company considered raising capital as part of a direct listing, a route that has never been tried before but decided against it partly due to how long it would take for the additional SEC review.
Then it was listing day, which went smoothly with shares rising nearly 10% from the opening price.
The morning after Amplitude’s party (they flew in 100 employees to New York) at PHD rooftop, Skates told me (over for avocado toast with an extra side of toast with butter and jam) that he was glad he got the VCs on board with the direct listing plan and that he was satisfied with the banks’ advice.
One takeaway for Skates: the banks still have a lot of power over the listing since they have information that no one else has on supply and demand of stock.
One takeaway for me: the IPO vs. DL debate isn’t going anywhere.
M&A focus
Qualcomm agreed to buy automotive-technology company Veoneer and is bringing in former Lazard dealmaker Antonio Weiss to help do it. Weiss’ firm SSW Partners, in its is first deal ever, will buy Veoneer, sell the Arriver technology business to Qualcomm as a formality and then find buyers for the rest of the company.
Qualcomm could be trying this unusual structure for different reasons, including to avoid any potential regulatory delay that could slow things down. Remember its bid to buy NXP languished for years after inaction by Chinese regulators before it died in 2018, sticking Qualcomm with a $2 billion bill.
Stonepeak is buying Teekay LNG Partners, a leading supplier of seaborne tankers of liquefied natural gas, and taking it private confirming an earlier Bloomberg News report by Ed Hammond.
Guardant Health decided against buying rival NeoGenomics, Ed Hammond reports. While some research analysts were supportive of the deal’s rationale, Guardant shares had taken quite a hit since we first reported the talks last week.
Also over the weekend, the Morrison supermarket drama came to an end with CD&R prevailing in an auction for what will be Britain’s biggest take-private deal in more than a decade.
Data drop
The third quarter wrapped up last week, adding another $1.3 trillion to the year’s booming M&A totals. If it carries on like this for the next three months, records set in 2007 will be well and truly surpassed.
Smashing Records
M&A is on track for a blockbuster year, with the potential to top $5 trillion
Source: Data compiled by Bloomberg
*data is through the end of the third quarter of each year
IPO watch
Globalfoundries just filed for a long-awaited IPO and said it would raise $1 billion, a number that could change.
Software startup Gitlab has set terms for its IPO and is starting its roadshow. It’s looking to be valued at nearly $9 billion so far.
Volvo also launched its IPO. The Swedish carmaker owned by China’s Geely is seeking to be valued at about $20 billion and as much as $25 billion to $30 billion if you take into account its stake in EV company Polestar, which is doing a deal of its own.
Some big IPO names hit the tape late Friday including Rivian, one of the most high-profile companies on deck this fall. Rivian said it had lost nearly $1 billion in the past six months and has an interesting arrangement with Amazon.
Informatica, which is backed by PE filed for an IPO and could be worth about $10 billion, report Crystal Tse and Liana Baker
Best of the rest
- Softbank is cutting more deals with fewer staff.
- Barclays has hired BofA tech banker Rob Brass.
- Ping An is considering selling one of its life insurance units.
- Global M&A Boom is here to stay, one DB banker says.
- U.K. grocery is a hot space after Morrison deal.
- Opinion: Walmart-Home Depot tie-up could make sense.
- Sun Life is buying U.S. dental benefits providers DentaQuest.
- A life insurance startup called Ladder just got funding.
- A
biotech SPAC deal was announced Monday.
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October 04, 2021 at 11:34PM
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Behind the Scenes at Amplitude's Direct Listing - Bloomberg
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