Surf Air Mobility Inc. shares were issued a reference price of $20 by the New York Stock Exchange to guide investors when the stock starts trading Thursday in the first significant direct listing in almost two years.
(Bloomberg) — Surf Air Mobility Inc. shares were issued a reference price of $20 by the New York Stock Exchange to guide investors when the stock starts trading Thursday in the first significant direct listing in almost two years.
Unlike a traditional initial public offering in which shares are sold at the offer price before trading begins, the reference price in a direct listing is merely an estimate of their value, providing a price for trading to begin.
Surf Air, located at the Hawthorne Municipal Airport in the Los Angeles area, is listing as IPOs are slowly rebounding from a slump that has lasted for more than a year. In listings on US exchanges this year, 97 companies have raised a combined total of $13.8 billion, compared with almost $19 billion at this point in 2022 and a record-setting $226 billion the previous year, according to data compiled by Bloomberg.
Despite widespread interest, direct listings have been used by only a handful of well-known companies, such as Spotify Technology SA, Slack Technologies Inc. and Coinbase Global Inc. Most recently, eyewear retailer Warby Parker Inc. went public via a direct listing in September 2021.
Blank-Check Deal
Surf Air launched its plan for a direct listing in the wake of a collapsed blank-check merger that would have taken the company public at a $1.42 billion valuation.
In a direct listing, companies typically don’t raise fresh capital and existing investors can usually begin selling shares on the first day of trading without the lockup period restrictions of an IPO. Because banks don’t underwrite shares as they do in an IPO, direct listings also can save on banking fees and the time spent on an investor roadshow.
Surf Air’s plans include merging with regional carrier Southern Airways Corp. immediately before the listing. With Southern Airways included, the combined business had a loss of $15.3 million on revenue of almost $28 million on a pro forma basis during the first quarter of this year, according to Surf Air’s filings with the US Securities and Exchange Commission.
Co-founder Liam Fayed will remain Surf Air’s largest shareholder after the listing with an 7.7% stake, followed by co-founder Sudhin Shahani with 7.1%, according to the filings.
Venture, Angel Backers
The company’s backers include a fleet of venture and angel investors with smaller stakes, according to data provider PitchBook. Those firms include IVP, NEA and ff Venture Capital, in addition to individuals including Facebook co-founder Eduardo Saverin.
Surf Air is working to pioneer hybrid electric and fully electric powertrains in aircraft. It warns, though, that those plans could face difficulties or even fail.
Surf Air’s advisers in the listing include Morgan Stanley, as well as Canaccord Genuity LLC, Moelis & Co., Robert W. Baird & Co. and Sanford C. Bernstein & Co. The company’s shares are set to trade on the New York Stock Exchange under the symbol SRFM.
–With assistance from Katie Roof.
(Updates with founders in eighth paragraph.)
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