Aug 27, 2020 - Economy & Business

Regulators approve NYSE for direct listings with capital raise

Photo: ANGELA WEISS/AFP via Getty Images

The U.S. Securities and Exchange Commission on Wednesday approved the New York Stock Exchange's rule change that will allow companies to raise new capital as part of a direct listing.

Why it matters: Though there's been growing interest in direct listings, especially from Silicon Valley tech companies, it has not been an appropriate path to going public for many companies that need to raise capital as part of the process.

  • This is the exchange's second attempt after the SEC rejected its first proposal for a rule change late last year.
  • In the latest proposal, a company has to sell at least $100 million worth of shares, or the combined value of outstanding shares must be at least $250 million.
  • Earlier this week, NYSE rival Nasdaq, filed with the SEC for approval of its own rule-change proposal to allow companies to do the same.

The big picture: Since music streaming giant Spotify paved the way in 2018, only Slack has taken the direct listing plunge, with now Asana and Palantir set to do the same.

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