In one of the largest consumer-facing IPOs of the year, Farfetch, an online luxury-fashion marketplace, listed on the New York Stock Exchange on September 21. Initially priced at $20 per share, the stock — FTCH — opened at $27 per share, rose to $30 and closed at $28.20, 41 percent above the target opening price. The company, which is based in London, sold 44.2 million shares and raised $885 million in the IPO, ending with a valuation of $6.2 billion, including shares already held by employees.
Farfetch could have listed on the London Stock Exchange or the Financial Times Stock Exchange. But it chose a U.S. exchange presumably because of the financial uncertainty caused by Brexit. Another advantage is that by filing in the U.S., Farfetch can take advantage of certain disclosure benefits. It states in its F-1 registration filing (for foreign entities):
We are eligible to be treated as an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including presenting only limited selected financial data in the registration statement on Form F-1 of which this prospectus is a part and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result, our shareholders may not have access to certain information that they may deem important.
However, being located in the U.K. has some potential drawbacks. In its filing, Farfetch states:
Lack of clarity about future U.K. laws and regulations, including financial laws and regulations, tax and free trade agreements, immigration laws and employment laws, could increase costs, depress economic activity, impair our ability to attract and retain qualified personnel. There is significant uncertainty about our…