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IPO, direct listing and SPAC merger

Companies reach public markets in three main ways. In an IPO a company sells shares to the public for the first time through underwriters. In a direct listing existing shares start trading without an underwritten sale. In a SPAC merger a listed shell company combines with a private company.

• An initial public offering is when a company first sells its shares to the public, usually at a fixed price set with underwriters, as with Alibaba at USD 68.00 per ADS in 2014.^1,2
• In Spotify's 2018 direct listing the prospectus covered only resales by existing shareholders, was not underwritten by any investment bank, and the opening price was set by buy and sell orders collected by the NYSE.³
• A SPAC, or special purpose acquisition company, goes public through its own IPO with no operating business, typically selling units at USD 10 and holding the proceeds in a trust account.⁴
• The SPAC then has a set period, typically two years, to find a private target. The combination, often called a de-SPAC, leaves a listed company carrying on the target's business, and SPAC shareholders may redeem their shares for a share of the trust.⁴
• Grab's 2021 combination with Altimeter Growth Corp. is an example. It raised gross proceeds of USD 4.5 billion, including a USD 4.0 billion PIPE.⁵

Sources

1. US Securities and Exchange Commission (Investor.gov), Glossary: Initial Public Offering (IPO) (28 October 2026)
2. US Securities and Exchange Commission (EDGAR), Alibaba Group Holding Ltd prospectus (Form 424B4) (22 September 2014)
3. US Securities and Exchange Commission (EDGAR), Spotify Technology S.A. prospectus (Form 424B4) (3 April 2018)
4. US Securities and Exchange Commission, Office of Investor Education and Advocacy, What You Need to Know About SPACs, Updated Investor Bulletin (21 August 2024)
5. Grab Holdings via SEC EDGAR, Grab to Trade on Nasdaq Following Successful Business Combination with Altimeter (1 December 2021)