Inside Slack’s direct listing; State Street goes toe-to-toe with BlackRock

Dear readers,

Slack’s non-IPO was no doubt the big story of the week, with its success leading some to predict the market could soon see many more direct listings.

Colin Stewart, Morgan Stanley’s lead banker on Slack’s public debut, told Bloomberg we could see as many as five direct listings in 2020. To put that into context, the only two high profile direct listings in the last two years have been Slack and Spotify. Direct listings differ from typical initial public offerings in that they allow existing shareholders like early employees and investors to sell their shares quickly on the free market. The company itself doesn’t raise any money and there’s much less interaction with Wall Street banks, known as underwriters in a traditional IPO.

Talking to a number of bankers and investors prior to Slack’s public debut I was pretty skeptical that it would be a hit. This is mainly beacause I had always been told that direct listings could only be accomplished with well-known consumer brands (Airbnb, for example, is reportedly weighing one). While Slack is a super popular office chat tool (we use it at BI), it is definitely not a household name.

But Slack proved everyone wrong, popping 50% on its first day of trading. Maybe this means more companies have a chance of pulling off a direct listing, and the process won’t remain niche for long. That could have major implications on fees for Wall Street, as direct listings are a much cheaper way for companies to list. Expect to see Morgan Stanley and Goldman in particular jockeying for key roles on direct listings, now that they’ve proven to companies that the model works and they’re the go-to advisers on these deals.

Please say hello to our newest reporter, Casey Sullivan, who joined us this week to cover the private equity beat.

Have a great weekend!

Olivia

Slack CEO Stewart Butterfield.

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Slack CEO Stewart Butterfield.
source
Drew Angerer, Getty images

Inside Slack’s direct listing: Here’s what actually went down between the tech company and its Wall Street advisers

Slack, which started publicly trading on Thursday, is the second large tech company to go public in a direct listing, an offering process that throws the traditional IPO on its head.

Slack hired 10 different banks to participate in its direct listing, but all but three didn’t do anything besides providing research on the company, sources familiar told Business Insider.

Instead, Goldman Sachs, Morgan Stanley, and Allen & Company will take a reported 90% of the fees, and have done all of the financial advising.

Here’s what they actually did on Slack’s direct listing.

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Meet the Goldman Sachs execs tasked with building the firm’s new Blackstone-esque private-investing unit, and pumping up the bank’s flagging stock price

Goldman Sachs on Monday announced a plan to combine five investing teams into a single alternatives-investing unit, to be housed in the merchant-banking division.

The three coheads of the new division will be Julian Salisbury, Andrew Wolff, and Sumit Rajpal, according to a memo to staff announcing the appointments.

The changes elevate a trio of executives with relatively little public persona into a crucial spot as CEO David Solomon looks to pump up the firm’s flagging stock price.

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The CEO of State Street explains why he’s going toe-to-toe with Bloomberg and BlackRock by offering asset managers a one-stop technology shop

State Street’s $2.6 billion purchase of Charles River last year thrust it into direct competition with Bloomberg and BlackRock for control of trading desktops across hundreds of asset managers.

The man charged with overseeing the strategy is CEO Ronald O’Hanley, a 20-year veteran of the investment management industry who assumed his role January 1.

O’Hanley’s building a one-stop shop to handle anything an investor might need, from pretrade analytics all the way through to post trade reporting and reconciliation.

The stakes are high. State Street’s stock price is down 40% since the Charles River deal.

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A BlackRock executive highlights the new kinds of skills he’s looking for in a $2 trillion business – and why old-school traders are still important

BlackRock, which manages more than $2 trillion in fixed income, is looking for a new kind of trader, the firm’s head of fixed income said at a conference.

Dan Veiner wants to hire both people with deep experience in fixed income, who can help the firm respond when money in the market dries up, and staff with one foot in fixed income and the other in technology.

The latter group uses Python and other skill sets to do “citizen development,” working on projects that can scale without professional developers.

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JPMorgan’s Highbridge Capital is unwinding a $2 billion fund and now turning to investor demand for credit

JPMorgan’s Highbridge Capital believes investors want more specialized hedge funds, so it is shutting down its $2 billion multi-strategy flagship fund.

Three of the four lead portfolio managers will stay on to the run the new multi-strategy credit fund.

More hedge funds were liquidated than launched last year, as new funds were at their lowest levels in 18 years, according to Hedge Fund Research.

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