Roblox Decides to Go Public Through a Direct Listing

(Barrons.com)

Roblox has changed its mind. The gaming platform is going public, but not through a traditional initial public offering. Instead, it is using a direct listing to sell class A shares.

Roblox said late Wednesday that it had not determined how many class A shares it would offer. It also didn’t disclose when the offering would come but said that it planned to commence the direct listing following completion of the Securities and Exchange Commission review process.

In a separate statement, Roblox also announced that it had raised $520 million in a Series H round led by Altimeter Capital and Dragoneer Investment Group. The funding values Roblox at about $29.5 billion, a statement said.

“While once viewed as a gaming platform, Roblox has emerged as a definitive global community connecting millions of people through communication, entertainment and commerce,” Brad Gerstner, CEO of Altimeter, said in the statement. “And as the world moves toward a hybrid future—where online and offline community and learning co-exist—we are proud to back a values-driven business that takes seriously its obligation to build an inclusive, creative, and positive community.”

Founded in 2004, Roblox hosts child-friendly games focused on digital characters resembling Lego blocks. The company’s decision to use a direct listing comes just months since it filed to go public in November via a traditional IPO. Goldman Sachs, Morgan Stanley, and J.P. Morgan were among the underwriters of the offering, which was expected to trade on the New York Stock Exchange. Roblox was expected to launch the IPO in December but chose to delay.

In December, the SEC approved a rule change from the NYSE that allows direct floor listings. Companies that use direct floor listings sell new shares and raise fresh capital in a single large transaction directly on the exchange without underwriters. This is different from traditional IPOs, in which companies sell shares to investors the night before the IPO. The pricing of direct listings is also set by the orders received by the exchange. In a traditional IPO, the underwriters set the price. Direct listings aim to level the playing field for investors and give companies another path to going public.

Roblox would be the fifth company to go public using a direct listing. Palantir Technologies (PLTR), Asana (ASAN), Slack Technologies (WORK), and Spotify Technology (SPOT) all used a direct listing when they made their public equity markets debut.


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