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James D. Rosener, a partner in the Commercial Department of Pepper Hamilton, was quoted in the July 8, 2019 Pensions & Investments article, "Direct Listings Open New Avenues for Institutions."
"It's not an efficient way to raise capital," said James D. Rosener, a partner in the commercial department of law firm Pepper Hamilton LLP who assisted a subsidiary of a foreign company with a direct listing. Once the company is public, registered with the SEC and has issued periodic public reports for a more than a year, it can issue shares and debt securities, he said.
"An IPO is not just a strategy to go public ... it's a capital-raising vehicle," Mr. Rosener said.
The market is more used to a traditional IPO, with controls including audits from accounting firms and investment bankers with the ability to buy and sell shares to stabilize the stock, at least in its first 30 days, he said.
"I just think the whole structure and ecosystem of a public offering … is what the market is ready for," Mr. Rosener said. "That's not to say that will never change." So far, Mr. Rosener said he has not seen a strong pipeline of potential direct listings.
Mr. Rosener agreed that the most likely candidates are companies with sophisticated private equity and venture capital backers that "will think it's a cool idea and do it."
"I don't know if they will be unicorns or lemmings," Mr. Rosener said. "Wall Street is full of followers."