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When is an initial public offering not an initial public offering? Answer: when you are called Spotify – maybe. It is considering a public flotation, without an IPO.

When companies become listed on the stock market, they usually look to raise money. It works like this: they issue new shares to institutional investors, who, on the following day, sell those same shares to the public. By doing this, the company that is floating can be sure of meeting its fund-raising targets and indeed one or more market maker normally guarantees a price at a certain level.

And then when the shares go on sale for the public, they usually go on sale for a much higher price. In this way, the institutional investors make a nice mark-up in just 24 hours, or so. Take the Snap IPO. The IPO price was $17, meaning that this was the price paid for by the institutional investors, but once the shares were for sale to the public they opened at around $24, making the institutional investors a cool 44 per cent profit.

Some might say this was unfair. That is to say private investors may feel hard done by, while Snap may feel if could have raised its required amount of money by selling a lot less shares.

But Spotify is considering doing it differently.

It has two big things going for it.

Firstly, it has around $1.7 billion sitting in the bank, so it does not need to raise money.

Second, one of its shareholders is a wee bank called Goldman Sachs.

The idea then is no new shares, no middle man making a mark-up, just allow existing shareholders to sell their shares over the stock market. So, that is good for those looking to exit.

Usually, when a company floats, the investment banks organise road shows and produce research. This generates publicity and helps ensure the company’s shares are in demand.

Spotify is considering doing it differently.

But then with Goldman Sachs as a major shareholder, there is already one rather influential investment bank with a good incentive to push the stock.

Then again, it strikes some as a tad arrogant. Dare the company really attempt this route?

It was suggested here yesterday, that there may be less of a role for record companies such as Universal or Sony in the Spotify universe, artists could go direct. Well, Spotify is now considering going direct to the public, but will it keep its nerve?