Slack 'seriously' considering direct market listing

Slack Technologies Inc is “seriously” considering making its stock exchange debut through a direct listing, a source familiar with the matter told Reuters on Friday.

The Wall Street Journal reported earlier in the day that Slack, which operates a popular workplace instant-messaging and collaboration app, is likely to debut in the second quarter and currently expects to do so via a direct listing.

The plan for a direct listing will make Slack the second big technology company after Spotify Technology SA to bypass a traditional IPO process in going public.

“Slack’s direct listing is an inherently less expensive way of going public, but what it really comes down to is speed,” said Daniel Lugasi, a portfolio manager at Florida-based VL Capital Management.

Slack declined to comment on reports of direct listing.

The company is an internet-based platform that allows teams and businesses to communicate with each other. Its closest competitor is Microsoft Teams, a free chat add-on for Microsoft’s Office365 users.

Slack has raised around USD 1.2 billion in 11 funding rounds, and has 36 investors, according to data provider Crunchbase. It counts SoftBank, T. Rowe Price, Sands Capital Ventures, General Atlantic as its investors.

Venture capital firms that have invested in Slack are “looking for an exit and with the rapid growth of Microsoft Teams, they want out fast. The direct listing provides the VCs with a quick exit and we believe this is the mitigating factor behind (Slack seeking a direct listing),” Lugasi said.

Reuters reported in December that Slack had hired investment bank Goldman Sachs Group Inc to lead its initial public offering as an underwriter.